Why might an analyst not put much weight on a firms current


Question: 1. Why is free cash flow sometimes referred to as a liquidation concept?

2. Why might an analyst not put much weight on a firms current free cash flow as an indication of future free cash flow?

3. Consider the following quote from the CFO of Lear Corp. (in The Wall Street Journal, May 8, 2002, p. Cl): "Sales of receivables and operating cash flows are entirely separate events. We see sales of receivables as a low-cost financing method; it shouldnt generate operating cash flow." Do you agree?

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Finance Basics: Why might an analyst not put much weight on a firms current
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