Why do DCFs and cash flows matter to investors when a lot of companies don't even pay dividends?
Why do DCFs and cash flows matter to investors when many companies don't even pay dividends? Is every large investor (HFs, Mutual funds, Institutional Investors) just trying to hit a percentage return on their stock ownership? If anything, it seems like only debt holders actually see real cash. Genuinely asking as I don't get why companies that don't pay out cash are valued with a cash flow model.
I'm just gonna answer this simply because I'm learning this stuff too and don't want to get too technical. Basically valuations of businesses are essentially the present values of the future cash inflows that a business can produce based on today's facts and forecasts.
I know what it is. I'm basically asking why these cash inflows even matter when a lot of companies don't even pay out dividends. Is it just a stock appreciation game or do investors actually care about cash flows because they want to receive it somewhere down the line?
Maiores cumque provident neque quia alias corporis. Aperiam eum qui dignissimos soluta in. Perferendis est incidunt illo id dolorem. Modi non consectetur et cupiditate nihil ea iusto. Sit repellendus iusto consequatur eum. Sed occaecati ea voluptas est quis amet saepe.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...