--%>
Assignment Help - homework help

Describe the three financial factors

List and described the three financial factors which influence the value of a business.

The three factors which affect the value of a firm's stock price are cash flow, timing, and risk.

The Importance of Cash Flow:  In any business, cash is what pays the bills. This is also what the firm receives in exchange for its products & services. Therefore, Cash is of ultimate importance, and the expectation which the firm will generate cash in the future is one of the factors which gives the firm its value.

The Effect of Timing on Cash Flows:  Owners & potential investors look at while firms can assume to attain cash and while they can expect to pay out cash. All other factors being equivalent, the sooner companies expect to obtain cash and the later they expect to pay out cash, the more valuable the firm and the higher its stock price will be.

The Influence of Risk:  Risk affects value since the less certain owners & investors are about a firm's expected future cash flows, the lesser they will value the company. The more certain owners and investors are about a firm's expected future cash flows, the higher they will value the company. In brief, companies whose expected future cash flows are uncertain will have lower values than companies whose supposed future cash flows are almost certain.

 

   Related Questions in Finance Basics

  • Q : Describe the terminal value calculation

    Describe the terminal value calculation at the ending of the forecast period. Why is it crucial? The firm which business operation is being valued is not accepted to suddenly cease operating at the ending of the discrete forecasting period, how

    		•
  • Q : Define Assembly Assembly : The

    Assembly: The California's lower house of Legislature included of 80 members. As an outcome of Proposition 140 (that is, passed in 1990) and Proposition 28 (that is, passed in 2012), members elected in or after 2012 might serve 12-years in the Legisla

    		•
  • Q : Define Reimbursements Reimbursements :

    Reimbursements: The amount received as a payment for the cost of services executed, or of other expenditures made for, or on behalf of, other entity (example, one department reimbursing the other for administrative work executed on its behalf). Reimbu

    		•
  • Q : Define Financial Controls Financial

    Financial Controls: Any measure of how fine a company or department controls its costs, at times stated as how far beneath or over budget it is. Financial controls are a critical portion of any financial system. They make sure that the resources are b

    		•
  • Q : Define Programs Programs : The

    Programs: The activities of an association grouped on the basis of common objectives. The programs are included of elements that can be further classified into tasks and components.

    		•
  • Q : Effect of bank charges discount

    What happens while a bank charges discount interest on a loan? While a bank charges discount interest on a loan the required interest payment is subtracted through the loan proceeds at the time the loan is made. It makes the effective interest

    		•
  • Q : Change in supply of money Normal 0

    Normal 0 false false

  • Q : Question based on imposesing tax Given

    Given equations describe market for widgets                         Demand: P = 10 - Q Supply: P = Q - 4

    Q : What are Feeder Funds Feeder Funds :

    Feeder Funds: For lawful basis accounting purposes, funds into which some taxes or fees are deposited on collection. In some situations administrative costs, collection expenses, and refunds are paid. The balance of such funds is transferable at any t

    		•
  • Q : Define Fund Balance Fund Balance : For

    Fund Balance: For accounting aims, the excess of a fund’s assets over its liabilities. And for budgeting aims, the surplus of a fund’s resources over its expenses.

    		•