What does a negative value for unlevered free cash flow imply for the claimants of a firm?
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Negative value of unlevered free cash flow ( UCF ) implies that the creditors and other claimants of the firm might not get cash payments from the firm. Claimants must understand that it shows weakness in the capital structure of a firm and shows negative outlook for the future of a business. Such companies might lay off workers, delay in cash payments to suppliers and sell inventory to generate cash flow.
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The company must raise capital from capital market or liquidate internal assets such as cash
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