Which of the following is not true regarding a target's previous cash flows?
A) They may serve as an initial base from which future cash flows may be estimated after accounting for other factors.
B) It may be easier to estimate the cash flows to be generated by a target than to estimate the cash flows to be generated from a new foreign subsidiary.
C) They are always good indicators of future cash flows.
D) All of the above are true.

Question

Quizplus · Accepted Answer

While previous cash flows may serve as a starting point for estimating future cash flows, they are not always good indicators of future performance. Factors such as changes in the industry or economy, competition, and company strategy may affect future cash flows. Therefore, it is not always true that previous cash flows are always good indicators of future cash flows.

Which of the Following Is Not True Regarding a Target's