When Debating the Issue of Whether to Use Free Cash

question 54

Short Answer

When debating the issue of whether to use free cash flows or earnings in a valuation model,economists sometimes argue that ____________________ can be subject to purposeful management by a firm and thus make them less useful.

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Definitions:

Equivalent Unit

A concept used in cost accounting to convert partially completed units into a number of fully completed units.

Mixing Department

A specialized production department where raw materials are combined or mixed to create a product or substance.

FIFO Method

First-In, First-Out method; an inventory valuation method where goods first purchased or produced are the first to be sold, used in accounting to calculate the cost of goods sold and ending inventory.

Ending Work

Also known as ending work in process, it refers to the value of goods still in production at the end of an accounting period.