Conceptually,why Should an Analyst Expect the Dividends Valuation Approach to Yield

question 20

Essay

Conceptually,why should an analyst expect the dividends valuation approach to yield equivalent value estimates to the valuation approach that is based on free cash flows available to be distributed to common equity shareholders?

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Definitions:

Perpetual Inventory System

An accounting method that records inventory transactions in real-time, thus providing a continual account of inventory balances.

Net Price Method

The net price method calculates the final price after all discounts, rebates, and allowances have been subtracted from the list price.

Catalog Price

The price listed in a catalog, not accounting for any discounts or promotions.

Credit Terms

Credit Terms are the payment terms and conditions established by a seller, including the period that has to pass before an invoice is considered overdue.