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Crazy boy [7]
3 years ago
15

The free cash flow hypothesis states:

Business
1 answer:
tresset_1 [31]3 years ago
8 0

Answer:

C. that issuing debt requires interest and principal payments to be paid thereby reducing the potential of management to waste resources.

Explanation:

Free Cash Flow is the cash generated by an organisationafter it has accounted for the outflows to capital assets maintenance costs and operating activities. Free Cash flow is a measure of a company's profitability after non-cash expenses in the account statement have been deducted. It is the cash flow an organisation has when it has limited or no debt obligations in its portfolio

The Hypothesis of free cash flow states that an organisation with a large amount of free cash will display less financial or spending discipline compared with an organisation that has debts obligations to spend cash on.

Based on the hypothesis, it becomes essential for such organisations to issue debts so that as the legal obligations (debts, principal and interest) increases, the potential to waste money as a result of fre cash flow reduces.  

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3 years ago
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Answer:

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4 years ago
On January 1, 20x1, the ABC Corporation purchased 80% of the XYZ Company's voting stock for $3,000,000. The FMV of all of XYZ's
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4 years ago
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