Smith's operating cash flows in millions were $100, $150, $80 during the past three years; while Jones' operating cash flows in millions were $105, $115, $110 during the same period. From the perspective of operating cash flows, which company would likely be perceived as riskier?

Question

Business

Jayden Higgins

31 July, 02:59

Smith's operating cash flows in millions were $100, $150, $80 during the past three years; while Jones' operating cash flows in millions were $105, $115, $110 during the same period. From the perspective of operating cash flows, which company would likely be perceived as riskier?

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Buckley · Answer 1

Smith

Explanation:

Cash flow at risk (CFaR) can be defined as the extent to which future cash flows may fall short of expectations as a consequence of changes in market variables ... It generally focuses on the market risk that impacts the corporate's cash flows, ignoring things such as political, operational, environmental and legal risk