Question

Smith's operating cash flows in millions were $100, $150, $80 during the past three years; while Jones' operating cash flows in millions were $105, $115, $110 during the same period. From the perspective of operating cash flows, which company would likely be perceived as riskier?

Answer 1

Answer:

Smith

Explanation:

Cash flow at risk (CFaR) can be defined as the extent to which future cash flows may fall short of expectations as a consequence of changes in market variables. ... It generally focuses on the market risk that impacts the corporate's cash flows, ignoring things such as political, operational, environmental and legal risk