You have been retained by Murphy & Company to recommend a distribution system template for projected...

You have been retained by Murphy & Company to recommend a distribution system template for projected free cash flow of +79.0, -38.8, +188.7, -5.4, and 6.7 over the 2016–2020-time period. What 10 questions do you need to pose to the C-Suite and the board to make a free cash flow distribution decision that is satisfactory to all involved? Be as specific as needed.

Expert Solution

Here we have the given cash flow as

Year	Cash flow
2016	79
2017	-38.8
2018	188.7
2019	-5.4
2020	6.7

We can observe theere is no consistency in the cash flow or a perticular pattern is not observed. following questions can be addressed to the board.

Sr. No.	Que	Remarks
1	How the marginal revenue for the years where the flow is negative can be improved?	On this the invester will judge their holdings
2	How the FCF can be made uniform?	Less deviations and the standard deviation reflects the less risks.
3	Does FCF helps to reduce uncertainty?	free cash flow help the investor be able to separate the stocks that make sense from the stocks that are most likely going to create a loss
4	How much is the extent to solve the invester's problems	FCF used to measure accuracy of the forecasts that are being used to simulate future growth
5	What is the level of transperancy in the business	Free cash flow metrics will only work when a company is operating with 100% transparency.
6	How much efficient investers to predit the projections	FCF works based on the projections created by the investor.
7	What are the expectations of long term investers	FCF helps to small investers
8	What are the expectations of short term investers	FCF helps to small investers
9	How the trend of FCF can be made increasing	An increasing free cash flows are the indicators of increased earnings.
10	How reliable Free Cash Flow is?	to attract investers company should have reliable FCF pattern.

jeff jeffy answered 2 years ago

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