Calculate and interpret the net present value of the companies’ annual free cash flow for a 5 year period taking into account a constant growth rate, and a discount rate that is equal to your companies weighted average cost of capital, which is 7%.
For each company, graphically trend the net income and cash flow from operations over the last five years. Based on a comparison of the income statement to the statement of cash flows, what accounts explain the greatest differences between net income and cash flow from operations. Comment on the quality of the earnings numbers.
Calculate and interpret the net present value of the companies’ annual free cash flow for a 5 year period taking into account a constant growth rate, and a discount rate that is equal to your companies weighted average cost of capital, which is 7%.
Links:
https://www.investopedia.com/articles/fundamental-analysis/11/present-value-free-cash-flow.asp