1. If net income is positive

a Cash flows from operations will also be positive, but free cash flows may be negative.

b Free cash flows will also be positive, but cash flows from operations may be negative.

c Both cash flows from operations and free cash flows will be positive.

d Both cash flows from operations and free cash flows may be negative.

2. Which of the below would likely be most preferred by an existing shareholder of a company?

A. A reduction in the debt-to-equity ratio.

B. An increase in the growth rate of free cash flows.

C. An increase in the growth rate of net income.

D. An increase in the growth rate of capital expenditures.