6. What is an IPO and what is Free Cash Flow?

Q: the following is NOT a basic type of cash dividends?

A: Step 1   A dividend is a portion of a company's profits and retained earnings that it pays to its…

Q: What are the advantages of the free cash flow valuation modelrelative to the dividend growth model?

A: Introduction: The measurement of financial performance calculated as operating cash flow less…

Q: How does sales stability affect the target capital structure?

A: Target capital structure: Target capital structure is defined as the combination of debt, preferred…

Q: What is equity capital?

A: The business cannot operate without funds and the company arranges these funds for the business…

Q: In comparison to free cash flow valuation, what's the main issue with dividend valuation?

A: Dividend discount model is a DCF model which assumes that the price of a stock should be equal to…

Q: Describe the role of capital markets in the capital cycle.  What, exactly do they do?

A: Capital markets play a systematic and tangible role in the capital cycle.

Q: Why do we need to decrease the stock holdings and increase the cash orbond holdings? Explain with an…

A: One of the important decisions which is taken by the financial manager is to maintain the minimum…

Q: 1. Explain how capital reduces banking risks. Discuss the importance of cash flows and economic…

A: Capital reduces banking risks:  It reduces banking risk by protecting against insolvency. It is used…

Q: What are the key points to consider when describing a firm's payout?

A: Meaning of dividend pay-out:The pay-out ratio shows the share of earnings paid out to shareholders…

Q: What are the consideration that need for dividend pay out policy?

A: The dividend is referred to as the share of profits, which used to be distributed to the company's…

Q: Which of the following firms is the most leveraged? O Cash coverage ratio 1.64 Cash coverage ratio…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: In what circumstances would you choose to use a dividend discount model rather than a free cash flow…

A: dividend discount models are used in companies to value the stock of rapidly growing companies but…

Q: What is the Cost of Equity Capital?

A: Companies’ capital structure may contain debt and equity. It is not necessary for a company to have…

Q: What is the Free Cash Flow to Equity (FCFE)model? How might it be applied? When is it…

A: FCFEIt is the measurement of availability of cash to the company’s shareholder of equity share after…

Q: 1) what is the duration of a stock?

A: Duration of Stock: It is the average of the number of days it will take before its dividends are…

Q: What is the role of capital market?

A: Introduction : Savings, as well as investment opportunities, are routed between providers…

Q: What rate do investors use to discount the capital gains and cash flows of firms?

A: Discounted cash flow estimates the present value of an asset by using projected cash flows.…

Q: What is FCF (Free Cash Flow) to Equity ratio?

A: The amount of cash generated by a company that is available to be transferred to shareholders is…

Q: How do free cash flows and the weighted averagecost of capital interact to determine a firm’s value?

A: Free cash flows to the firm (FCFF) are the cash flows that a firm expects to earn from its…

Q: 1. Can a firm with positive net income run cash? Explain.

A: Cash is very important in the business and there is need of cash in business and no business can…

Q: 1. Discuss the following theories of capital structure. (i). Trade-off theory (ii). Pecking order…

A: Theories of Capital Structure Acceptable theories of Capital structure  are Traditional trade-off…

Q: Explain how to use the free cash flow valuation model to find the price per share of common equity

A: Free cash flow to the firm is the cash flow available to the company’s suppliers of capital after…

Q: What benefits do financial markets offers?

A: Financial market refers to the place where trading of various financial securities takes place.…

Q: 1. Explain what capital structure theory attempts to do and demonstrate useful lessons that can be…

A: Note: “Since you have asked multiple question, we will solve the first question for you. If you want…

Q: What is the trade-off theory of capital structure?How does it differ from MM’s theory?

A: Trade off theory of capital structure: This is a theory in which the company decides on the ratio of…

Q: Why does "maximizing firm value" equal to "maximizing stockholders' equity"?

A: Maximization of shareholders wealth means increasing the overall value of the firm, not just its…

Q: What is free cash flow to equity (FCFE)?

A: Introduction: Cash flow is nothing but the cash actually receiving less cash outlay or outflow from…

Q: One of your colleagues has recommended that you buy 10 shares in a certain company, say, ABC Ltd. He…

A: An evaluation of a company's worth based on its anticipated ability to generate future free cash…

Q: What is free cash flow, and how does it work? If you were an investor, why could you be more…

A: When all operational costs and capital expenditures have been met, free cash flows represent the…

Q: What is stock split? How is it equivalent to paying a dividend?

A: The stock split is events that increase the outstanding shares and reduce the stated par value. For…

Q: 2. What is the Importance of Stock Market in an Economy?

A: “Since you have posted multiple questions, we will solve the first question for you. To get the…

Q: Discuss how the concept rbitrage profit help estab- um in capital markets. Di:

A: The equilibrium of the stock market involves setting market prices such that supply equals demand…

Q: on, what is the main problem with the dividend valuation models as compared to the free cash flow…

A: Dividend growth model is very good method but still has many problems.

Q: Using the free cash flow valuation model, show the only avenues by which capital structure can…

A: With using of the FCF valuation model, the basic definition through the capital structure used…