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Explain the theory behind the free cash flow valuation approach. Why are the free cash flows value relevant to common equity shareholders when they are not cash flows to those shareholders, but rather
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Explain the theory behind the free cash flow valuation approach. Why are the free cash flows value relevant to common equity shareholders when they are not cash flows to those shareholders, but rather are cash flows into the firm?

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Answer:

See explanation

Step-by-step explanation:

The free cash flows value relevant to common equity shareholders because they consists of cash that can be distributed to shareholders as dividends. In other words this is Distributable Cash.

User Neilkimmett
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