9 - Suppose a supplier allows payment for inventory 30 days...

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Suppose a supplier allows payment for inventory 30 days from delivery, and the firm is able to sell all of the inventory within 15 days of delivery. How does this affect free cash flow? Free cash flow is money earned from operations that a business can put aside at the end of an accounting period. Free cash flow is net cash flow from operating activities less capital expenditures, which are investments in property, plant, and equipment. The very basic definition of free cash flow is: FCF = Net Cash Flow from Operating Activities - Capital Expenditures Operating activities generate cash inflows and outflows through the sale of products and services and the purchase of supplies and other general business expenditures. An outflow of cash occurs when a company transfers funds to another party (either physically or electronically). Such a transfer could be made to pay for employees, suppliers and creditors, or to purchase long-term assets and investments. A cash inflow is of course the exact opposite; it is any transfer of money that
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9 - Suppose a supplier allows payment for inventory 30 days...

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