List and explain the three financial factors that influence the value of a business.
The three factors that influence the value of a firm's stock price are timing, cash flow, and risk.
The Importance of Cash Flow: In commerce, fund is what pays the invoice. It is as well what the firm receives in exchange for its services and products. Cash is thus of ultimate importance, and the prospect that the firm will generate funds in the future is one of the factors that gives the firm its value.
The Effect of Timing on Cash Flows: Potential investors and Owners look at when firms can expect to receive funds and when they able to expect to pay out cash. All additional factors being equal, the earlier companies expect to receive cash and the later they expect to pay out cash, the further more valuable the firm and the higher its stock price will be.
The Influence of Risk: Risk affects value for the reason that the less certain investors and owners are about a firm's expected future cash flows and the lower they will value the company. The more certain investors and owners are about a firm's expected future cash flows and the higher they will value the company. In short, the companies whose predictable future cash flows are uncertain will have lower values than companies whose predictable future cash flows are practically certain.