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

Question

Quizplus · Accepted Answer

The focus should be on maximizing the present value (PV) of the free cash flow because it represents the value created by the company's operations. Accounting earnings may not accurately represent a company's financial performance, and financial policy alone may not be enough to increase the share price. Therefore, the best choice is to focus on maximizing the present value of the free cash flow.

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