One Disadvantage of the Free Cash Flow Valuation Method Is

question 17

Short Answer

One disadvantage of the free cash flow valuation method is that many times the ______________________________ dominates the total value.

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Definitions:

Operating Assets

Assets that are used in the daily operations of a business to generate revenue, such as machinery, buildings, and equipment.

Controllable Margin

The portion of income that remains after deducting controllable expenses, indicating the earning performance that management can influence.

Controllable Costs

Expenses that a manager or business has the power to influence or change in the short term.

Managerial Responsibility

The obligation of managers to make decisions and take actions that maximize the value and effectiveness of an organization.