Question #91
Reading: Reading 21 Free Cash Flow Valuation
PDF File: Reading 21 Free Cash Flow Valuation.pdf
Page: 43
Status: Unattempted
Correct Answer: A
Question
Free cash flow (FCF) approaches are the best source of value when:
Answer Choices:
A. FCFs track profitability closely over the analyst's forecast horizon
B. a firm has preferred stock
C. a firm is paying a dividend that is higher than the industry average
Explanation
FCF approaches are best when those flows are a good indication of a firm's profitability
over the analyst's forecast horizon.