The importance of cash flow to people both inside and outside an entity is apparent by a quick look through financial papers and Internet sites. For instance, Foster's Group Ltd eagerly announced in the press that it has curtailed its negative cash flow for its operations in China. BHP also announced that its cash flow was benefiting from a strong oil price, and Austar united Communications Ltd announced a major debt restructure to help it meet its goal of having free cash flow.
Required
a. Outline the reasons why companies are eager to share positive news about their cash flow performance.
b. What is free cash flow? Is it a good measure of cash flow performance?