The Value of Any Asset Is the Present Value of the Cash

question 92

True/False

The value of any asset is the present value of the cash flows the asset is expected to provide.The cash flows a business is able to provide to its investors is its free cash flow.This is the reason that FCF is so important in finance.

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Definitions:

Working Capital

The distinction between an organization's immediate assets and liabilities, showing its short-term fiscal well-being and effectiveness in operations.

Plant and Equipment

Long-term tangible assets used in the operation of a business, not intended for sale.

Noncurrent Assets

Long-term assets that are not expected to be converted into cash, sold, or consumed within one year or the operating cycle, including property, plant, and equipment.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of shareholders.