6. Free cash flow Accounting statements represent a company's earnings, but this is not the real cash that a company generates. Earnings data can be manipulated and can be deceiving. Thus, corporate decision makers and security analysts focus on the free cash flow that a firm generates to analyze the company's real cash position. Which of the following statements best describes free cash flow? O Residual cash flow after taking into account operating cash flows, including fixed-asset acquisitions, asset sales, and working-capital expenditures O Cash flows generated by operating the business Suppose you are the only owner of a chain of coffee shops near universities. Your current cafes are doing well, but you are interested in starting a fine-dining restaurant. You decide to use the cash generated from your existing business to enter into a new business. Your accountant provides you with the following data on your current financial performance Financial update as of June 15 Your existing business generates $123,000 in EBIT The corporate tax rate applicable to your business is 35%. . The depreciation expense reported in the financial statements is $23,429 You don't need to spend any money for new equipment in your existing cafes; however, you do need $18,450 of additional cash. napkins, and more formal tableware-on credit by $6,150 . You also need to purchase $9,840 in additional supplies-such as cloth tableclothes and It is also estimated that your accruals, including taxes and wages payable, will increase Based on your evaluation you have in free cash flow Can a company have negative free cash flow? O No Yes