Firms with substantial amounts of free-cash-flow often discover that:
A)Conglomerate mergers are the best use for the funds
B)Accounting profits are what truly matter
C)They have become takeover targets
D)Their capital budgets have been too low

Question

Quizplus · Accepted Answer

Firms with substantial amounts of free-cash-flow often become takeover targets because they have excess cash that is not needed for reinvestment in the business. This excess cash can make the company attractive to potential acquirers who could use the cash for other purposes, such as financing growth or paying dividends.

Firms with Substantial Amounts of Free-Cash-Flow Often Discover That