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stiks02 [169]
4 years ago
14

Would it be possible for a company to report negative free cash flow and still be highly valued by investors; that is, could a n

egative free cash flow ever be viewed optimistically by investors? Explain your answer.
Business
1 answer:
Firlakuza [10]4 years ago
3 0

Answer:

Yes, a negative free cash flow can be viewed optimistically by some investors depending on what they are looking for.

Explanation:

A negative free cash flow refers to inability of the business to generate enough cash flow.

This could be seen at face value as a disadvantage but an investor will check the books to know why and that will help to make a more informed decision.

Some companies start out acquiring infrastructure, setting up internal structures, human resources and internal workings of the organization years before proper sales that attract consistent cash flow starts to trickle in.

This pre-operating and initial operating expenses does not reflect well on paper thereby giving a negative free cash flow.

An investor would be optimistic about investing in a company of this sort that has put in place the right conduit to generate and sustain massive cash flow in the nearest future.

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A toy manufacturer estimates the demand for a game to be 2000 per year. Each game costs $3 to manufacture, plus setup costs of $
ASHA 777 [7]

Answer:

See below

Explanation:

We will compute the above using the EOQ

EOQ = √ 2 × D × S / H

EOQ = √ 2 × 2,000 × 500 / 2 × 3

EOQ = 1,000

1,000 units of toys should be manufactured at a time

Production runs = 2,000 / 1,000

Production runs = 2

8 0
3 years ago
A study was done to determine the average commute time per week to and from class for an spc student attending a lecture class.
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All SPC students who attend lecture classes

6 0
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Help!<br> What is an endorsement?
Annette [7]

Answer:

A signature on the back of a check

5 0
3 years ago
Cullen Company has $235,000 in credit sales, and $164,200 in its Accounts Receivable at the end of the year. The company uses th
S_A_V [24]

Answer:

Net Realizablel Value of Account receivable = $142,850

Explanation:

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Total Accounts Receivable                                  $164,200

- Pre-adjusted Uncollectable Account balance  $7,250

- Current Year Uncollectable Amount                 <u>$14,100   </u> ($235000*6%)

Net Realizable Value                                            <u>$142,850</u>

4 0
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