Asked by KAREN NOELIA PINEDA on May 22, 2024
Verified
A component that is unrelated to future free cash flows or future earnings and is not pertinent to assessing current share price is a noise component.
Noise Component
The part of a financial or economic dataset that is random or irrelevant to the analysis, often obscuring underlying trends or patterns.
Free Cash Flows
The amount of cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.
- Identify the significance of earnings figures in determining sustainable long-term cash flows.
- Comprehend the significance of fundamental valuation in evaluating the timing, magnitude, and unpredictability of future cash flows.
Verified Answer
AG
Alexa gonzalezMay 23, 2024
Final Answer :
True
Explanation :
A noise component is an irrelevant factor that does not affect future free cash flows or earnings, and therefore is not relevant in assessing the current share price.
Learning Objectives
- Identify the significance of earnings figures in determining sustainable long-term cash flows.
- Comprehend the significance of fundamental valuation in evaluating the timing, magnitude, and unpredictability of future cash flows.
Related questions
As Transitory Components Become a More Important Part of a ...
A Component That Is Valuation-Relevant and Expected to Persist into ...
Earnings Are a Proxy-Imperfect but the Best We Have-For Free ...
When the Net Cash Inflow Is the Same Every Year ...
Some Investment Projects Require That a Company Increase Its Working ...