medium · Principles of Finance financial-statements-markets-wc
A company recognizes Stock-Based Compensation (SBC) of 50 million as an operating expense.
In the reconciliation of Net Income to Cash Flow from Operations, how is this handled, and what is its impact on FCFF?
- It is treated as a financing inflow in the CFF section and does not affect FCFF.
- It is added back because it is a non-cash expense, increasing FCFF.
- It is subtracted because it represents a future cash obligation to employees.
- It is ignored in FCFF because it only affects the Statement of Stockholders' Equity.
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