If an analyst wants to value a potential investment in the net operating assets of a division of another firm,the relevant cash flows the analyst should use are:
A) free cash flow from operations.
B) free cash flows for all debt and equity capital stakeholders.
C) free cash flows to common equity shareholders.
D) cash flow from operations.

Question

Quizplus · Accepted Answer

Free cash flows for all debt and equity capital stakeholders represent the cash flows available to all providers of capital, which is relevant for valuing the net operating assets of a division.

If an Analyst Wants to Value a Potential Investment in the Net