Explain the theory behind the free cash flow valuation approach. Why are the free cash flows value relevant to common equity shareholders when they are not cash flows to those shareholders, but rather are cash flows into the firm?

Q: How do I calculate a company’s free cash flow if it is all-equity financed?

A: In case the firm is fully equity financed, free cash flow = Cash flow free from all kind of claims =…

Q: Cash flow analysis Which statements are correct? Select one or more options: a- A new share issue…

A: Cash flows means cash inflows and cash outflows in the business. It can be from operating…

Q: Explain "free cash flows." Why do managers like to retain free cash flows instead of distributing it…

A: Free cash flows (FCF) equals the amount left with the company after the required payments to the…

Q: What does a negative value for unlevered free cash flow imply for the claimants of a firm

A: Unlevered free cash flow for a company is that free cash flow which is determined and computed…

Q: Trur or False? The Cash flow received from the firm's assets  must equal the cash flows to the…

A: Answer: The answer is TRUE; cash flow from assets is equals to cash flow to stockholders plus cash…

Q: Discuss the factors that are likely to influence the desired level of cash of a companyb. Outline…

A: Cash is related to the accounting term which is cash equivalents, that refers to the assets which…

Q: Why would a company decide to pay investors cash? What are the two ways to give cash back to…

A: Cash is paid in terms of dividends.

Q: Would it ever be rational for a firm to borrow money in order to pay cash dividends? Explain.

A: The dividends can be paid by company on following  these rules: 1. Out of profits of the company…

Q: Discuss the factors that are likely to influence the desired level of cash of a company

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

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: How should (a) signaling and (b) the clienteleeffect be taken into account by a firm as it considers…

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

Q: Which of the following statements is not correct   O a. Cash balance does not have an opportunity…

A: 1.A firm may hold surplus cash balance to pay dividend to its shareholders. It is correct…

Q: nalysts pay so much attention to the Statements of Cash Flows versus the Income Statement?

A: Income statement shows the profit and loss over the period after deductions of expenses from the…

Q: he firm's capital structure refers to: Select one: a. the amount of dividends a firm pays b. None of…

A: Answer: The firm capital structure is the structure which shows the invested capital in the…

Q: Give two reasons stockholders might be indifferent between owning the stock of a firmwith volatile…

A: Stock refers to the financial securities which are issued by the organization to raise funds.…

Q: Show the relationship between the cost of capital and the intrinsic value of a firm.

A: Hi There, Thanks for the posting the question. Per Q&A honor code, The solution for the first…

Q: Which of the following is not one of the primary considerations management must make before a cash…

A: Answer: Primary considerations are those which directly impact any decisions made for the company.…

Q: What is float? How do firms use float to increase cash managementefficiency?

A: Financially, the float consists of cash that is shortly measured twice as long as a deposit is…

Q: Which of the following factors influence a firm's ability and/or willingness to pay dividends?   a.…

A: A dividend refers to the distribution of profits to the shareholders of the company. A dividend is…

Q: Why can it be misleading to use a firm's working capital to discuss cash flow without further…

A: Working capital and cash flows are the important aspects of an organization that helps an investor…

Q: Explain "frce cash flows. Why do managers like to retain free cash flows instead of distributing it…

A: Free cash flows : As the name suggests, free cash flows relates to the fund that are leftover to a…

Q: Which of the following is NOT an advantage of the valuation multiple method as compared to the…

A: Valuation multiples are financial assessment tools that compare different organizations by…

Q: When a firm is deciding how much cash to distribute to stockholders, it should consider two things:…

A: Given: Project Cost of capital Internal rate of return H(High risk) 12% 14% M(Medium risk) 9%…

Q: Dividend is a financing decision as well as distribution of earnings.  Do you agree with the…

A: Dividend is the distribution of the company’s earnings to the shareholders of the company. A…

Q: Give two reasons why stockholders might be indifferent between owning the stock of a firm with…

A: Stock is a type of security in a company that denotes ownership. Every company can raise the capital…

Q: Suppose you are the only owner of a chain of coffee shops near universities. Your current cafés are…

A: Free Cash Flow=Net Income + Non Cash Expenses - Increase in working capital - Capital Expenditure…

Q: Shareholders want managers to maximize the   (Click to select)   dividend   expected return…

A: Shares refer to a unit that depicts the ownership held by the investor in the capital of the company…

Q: What are the company motives for declaring dividends or stock repurchase programs? 2. How would you…

A: Because you have asked multiple questions, we will solve the first question as per the policy of…

Q: subject to ethical

A: Maximizing shareholder wealth is the single or top priority for a company has led to a number of…

Q: When do liquidity management solutions deliver maximum value to the firm?

A: Liquidity management is an important aspect of treasury management. Essentially treasury management…

Q: he concept of market efficiency underpins almost all financial theory and decision models. When…

A: Market efficiency is the degree to which current prices accurately represent all available, relevant…

Q: Which of the following statements is NOT CORRECT? The corporate valuation model can be used both for…

A: Corporate valuation is a systematic process to find the true value based on financial data.  Most of…

Q: Answer the following questions for the directors: True or false, does the statement of cash flows…

A: Statement of Cash Flows is a Financial Statement which provides data about the movement of cash of a…

Q: whether an investing firm is the primary beneficiary in a variable-interest entity. When is an…

A: Since you have posted multiple questions, we will answer the first one for you. If you want a…

Q: What are the objectives of the firm in raising capital through external sources and how are these…

A: The external source of capital is the capital that comes out of the business. It can be a bank loan,…

Q: Which of the following statements is/are CORRECT? O 1) Capital budgeting evaluates timing and risk…

A: 1. false as the capital budgeting evaluates risk and timing of future cashflow considering the size…

Q: Did the cash flow from operations cover the dividend payment made by the firm (if any)? b) If the…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: Which of the following would increase cash flow for a firm? a. A purchase of fixed assets b. Cash…

A: In this question we are given 4 options related to cash flow and we require to select the correct…

Q: When a firm is short of cash yet it wishes to distribute something to shareholders, it should…

A: The following are some of the types of Dividends Cash Dividend Stock Dividend Liquidating Dividend…

Q: Discuss the strength and weaknesses of cash-flow based valuation models. How do variations in the…

A: Cash flow based valuation models  Strengths : DCF depends, unlike most valuation models, on inflows…