Free cash flow is defines as the cash flow from a business that is avaible to security holders of the corporation. It is the cash that remains after a business finds its operations and capital assets.
Free cash flow can be used instead of earnings nper share to determine the profitability of a business, an advantage is that it remove non cash items from income statement.
Free cash flow= Cash flow from operations- cash flow from investing activity ( capital expenditure)
Taxes – the business structure that you decide will also
decide on how much the tax that you will pay will cost. It will have effects on
the kinds tax you must pay.
Legal Liability – This should be an advantage because you
need protection from your personal assets.
Customers will less likely agree to pay high price for an experience good
Explanation:
Once a firms reputation is ruined or tarnished, a great number of customers will naturally lose trust as regards products from that firm. Most customer would not want to gamble with their money even with the slight increase in interests rates, it is expected that a firm should always deliver quality product on a consistent basis. Inconsistency in product quality will lead to a reduction in customer trust and overtime, customer base in general.