If a manager wishes to raise his firm's share price, he should do which of the following? I? of the free cash flow. II Focus on accounting earnings. III. Focus on financial policy.

Question

Quizplus · Accepted Answer

I is correct because free cash flow is the cash that a company generates after paying for its operating expenses and capital expenditures. This cash can be used to pay dividends, buy back shares, or invest in new projects. All of these actions can lead to an increase in the share price. II is incorrect because accounting earnings are not a good measure of a company's financial performance. III is incorrect because financial policy is not a direct driver of share price.

If a Manager Wishes to Raise His Firm's Share Price