What does it mean when a company’s free cash flow is negative in one or more years? Do negative values of free cash flow in any way alter or invalidate the notion that a company’s fair market value equals the present value of its free cash flows discounted at the company’s weighted-average cost of capital? Suppose a company’s free cash flows were expected to be negative in all future periods. Can you conceive of any reasons for buying the company’s stock?

Q: What is the impact of decrease in assets or increase in liabilities resulting in decreases in…

A: when the assets reduces, the profits of the company also tends to fall. there can be no chance of…

Q: Which of the following statements is correct?   a. Companies may pay too high a price in a large…

A: companies may pay a high price in a large open market to repurchase its shares because it needs to…

Q: Which of the following actions should Paperang Inc. take if it wants to reduce its cash conversion…

A: Cash conversion cycle is that the total period of time taken by the firm to finish its operating…

Q: What is the incentive for managers to overstate a restructuring reserve in the current period in…

A: In order to create a restructuring reserve, the company will incur those expenditures which will be…

Q: Which of the following is true? Group of answer choices All of the other answers provided are false…

A: Liquidity is crucial for the following reasons:Operational Needs: A company needs cash to pay for…

Q: Define the following terms: inventory conversion period, average collection period, and payables…

A: All the transactions of the company that are happened during the year will be recorded first in the…

Q: Which of the following statements is true? a. High liquidity means a company is short on cash and…

A: Debtholders are just like the creditors of the company and they will have prior claim on the assets…

Q: A firm cannot maintain a return on common equity less than the required rate of return and stay in…

A: Required rate of return is the minimum return rate which is accepted by the shareholders for the…

Q: If the generated income cash of  some company were used to buy back common stock,thus reducing the…

A: Return on equity means the profit as percentage on equity. Equity means the owner funds. Return on…

Q: Is a negative free cash flow (FCF) always a bad sign? A negative free cash flow means that the…

A: Yes. Negative free cash flow is not necessarily bad. Most rapidly growing companies have negative…

Q: If a company’s market price rises above the IPO price, does that suggest that the company left money…

A: An initial public offering refers to the new or fresh issue of stock to a group of investors.…

Q: Assume you are an investor interested in buying out a publicly traded company. There are several…

A: The cash flow statement, also known as the statement of cash flows, is a financial statement that…

Q: Which of the following methods can NOT be used to improve the firm’s cash conversion cycle?…

A: Cash conversion cycle (CCC) expresses the length of time, in days, that it takes for a company to…

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: If a company is thinking about distributing excesscash through a stock repurchase program in lieuof…

A: The company chooses to repurchase its shares in the following situation. To reduce outstanding share…

Q: A firm can increase its earnings growth yet not affect the value of its equity. True OR False ???

A: Equity value is the value of a company available to owners or shareholders.

Q: Which ONE of the following statements is FALSE? O Firms report peripheral gains and losses on a…

A: Restructuring  is a process in which company change their capital structure, and debt convert into…

Q: How can a Company Show Positive Net Income but go Bankrupt? What does Working Capital Mean? Why do…

A: Kindly find the answers to you question below :

Q: 12. Which of the following statements is FALSE? A) The Law of One Price implies that leverage will…

A: Leverage is referred as the usage of the debt or borrowed capital, which helps in undertaking the…

Q: If a company lowers its cash dividend payment, does that always send a bad signal? If not, provide…

A: Every company receives their capital in the form of equity or debt. Equity is from the shareholders…

Q: Following IFRS, which statement is false? Group of answer choices If the revaluation initially…

A: The objective of this question is to identify the false statement among the given options related to…

Q: Which statement is true?

A: Financial Statements: These are records of the finance relating activities and positions of the…

Q: m valuation, earnings and cash flows, re the cost of equity is the appropriate d y is the cost of…

A: The Cost of Equity is generally higher than the Cost of Debt since equity investors take on more…

Q: Which of the following is one of the causes of over capitalization? a. Reduction in the market…

A: Over Capitalization means when a company have huge amount of debt in its book and its Net assists…

Q: Suppose that on its historical Income Statements, a firm always split its total depreciation and…

A:

Q: The Nobel Prize-winning Modigliani & Miller Theory states that a firm’s capital structure does not…

A: Modigliani & Miller Theory : This theory was founded by  Merton Miller & Franco Modigliani…

Q: How can a company’s operations generate a healthy profitand yet produce meager or even negative cash…

A:

Q: What would be a reason a company would want to overstate income?A. to help nudge its stock price…

A: Income of the business is very important and useful measure of profitability of the business. More…

Q: Which of the following would increase a company’s additional financing needed (AFN)? a) the…

A: AFN is used in context of business looking to expand. Additional funds needed are raised using notes…

Q: . If the company reduces its DSO without seriouslyaffecting sales, what effect would this have…

A: DSO is an abbreviation for Day’s sales outstanding which if increased by the manager will allow…

Q: How does the annual rate of return differ from other methods? It has more complex calculations. It…

A: The annual rate of return (ARR) is a financial metric used to evaluate the profitability of an…

Q: Which of the following statements is NOT CORRECT?   a. The cost of retained earnings is less…

A: The correct option is: b.This statement is not correct because internal equity comprises of retained…

Q: hat does it mean when a company has zero net income but its stock price has increased? How do you…

A: Equity method: The equity method is used to record the profit earned by a company by investing in…

Q: Select all of the following that will have a negative effect on the firm" flows? (Assume other…

A: When expenditures exceed income, a negative cash flow arises, potentially leading to financial…

Q: For the example below, list and describe the input(s) (observable or unobservable) and valuation…

A: Level 1 - Quoted Prices in Active Markets: It includes inputs that are based on quoted prices in the…

Q: Which of the folowwing statements about a company's stock valuation is incorrect? Select one: a.…

A: The company's stock valuation is the function of amount of cashflow and timing of the cashflow

Q: we know that depreciation is linked to the net cash flows of the company's investments. In fact, any…

A: Depreciation expense: Depreciation expense is the reduction in a particular asset due to its use or…

Q: What major advantage does a company that has positive free cash flow have over a  company that has…

A: Free cash flow : It is defined as a financial performance metric which shows how much funds are…

Q: Which of the following circumstances would result in an increase in cash from operations but not an…

A: Cash flow statement: It is a statement which reports the cash inflows and outflows of a business…

Q: What effect will disinflation following a highly inflationary period have on the reported income of…

A: Disinflation is the reduction or lowering of the pace of inflation. In other words, in situation of…

Q: Suppose the management of a firm is trying to allocate liquid assets to two accounts, one of which…

A: The ratio of investment typically refers to the proportion of funds allocated to different assets…

Q: A publicly listed traded company is in financial distress. It is projected to stop paying dividends…

A: There are various valuation methods that can be used to value a comopany like discounted cash flow…