Accounting statements represent a companys 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 companys real cash position. Which of the following statements best describes free cash flow?

The amount of a firms available cash used to write off capital expenditures and depreciation

The amount of a firms available cash that can be used without harming operations or the ability to produce future cash flows