If Morris Corporation has a negative $131 million free cash flow, which of the following statements is most likely true?
A)Morris' capital expenditures plus cash dividends is less than its cash provided by operations.
B)This free cash flow indicates that Morris will be able to repay its long-term obligations when they come due.
C)This free cash flow indicates that Morris has ability to retire its stock.
D)Morris' cash provided by operations is less than its cash dividends plus capital expenditures.

Question

Quizplus · Accepted Answer

A negative free cash flow suggests that the cash provided by operations is less than the sum of cash used for capital expenditures and cash dividends.

If Morris Corporation Has a Negative $131 Million Free Cash