Is the following statement true or false? 'The Modified Free Cash Flow approach incorporates a charge for capital employed.'

The Modified Free Cash Flow approach indeed incorporates a charge for capital employed, making the statement true. This approach is designed to provide a clearer view of a company's ability to generate value by taking into account not just the free cash flows generated by the business operations but also the cost of the capital that is tied up in those operations.

By charging for capital employed, this method highlights the importance of effectively utilizing capital resources to generate returns. It shifts focus from mere cash generation to the efficiency of capital allocation, thereby offering a more nuanced analysis of a company's financial health and value creation potential. This is particularly significant for investors and analysts when evaluating investment opportunities.

The other options do not align with this understanding. For instance, indicating false would overlook the essential aspect of capital cost in valuating cash flows. Choices like "N/A" or "it depends on the company's size" would misrepresent the standard application of the Modified Free Cash Flow approach, as it is fundamentally designed to include capital charges irrespective of a company's size.