Managerial Finance
DQ 1
Define the term "capital intensity." Assuming all other elements are held constant, how would a decline in the capital intensity of a firm affect additional funds needed (AFN)? Would economies of scale combined with rapid growth affect capital intensity?
DQ 2
Consider you are a valuation analyst for Goodyear Tire and your company is planning to acquire RGC Tire. RGC's stock price dropped by 78% YoY and they missed their dividend payment for each of the prior three quarters. Describe why the free cash flow valuation method would be useful in this case. Provide your rationale and any supporting data.