The term free cash flow is frequently applied to cash flows that differ from the definition for FCFF that should be used to value a firm. Two such definitions of free cash flow are given below. Compare these two definitions for free cash flow with the technically correct definition of FCFF used in the text.
A. FCF = Net income + Depreciation and amortization - Cash dividends -Capital expenditures.
B. FCF = Cash flow from operations (from the statement of cash flows) - Capital expenditures.