Multiple choice questions on Cash flow method and sources of external capital.
1. What does the free cash flow method of business valuation focus on?
a. Discount market value added to the present
b. Discount current year earnings to the present
c. Discount current year cash flows to the present
d. Discount projected future cash flows to the present
2. Which of the following best represents the stream of income that is available to common stockholders?
a. Net profit after tax and after preferred dividend payments
b. Earnings before interest and taxes
c. Gross profit
d. Operating profit
3. Which of the following is a source of external capital?
a. Retained earnings
b. Inventory
c. Long-term debt
d. Operating income (earnings before interest and taxes)