Question

Cash flows and risk are key determinants of a company’s share price. What impact if any would an increase in future cash flows have on a company’s share price ceteris paribus (all other considerations remaining unchanged)? Why?

Answer 1

the increase in future cash flow lead to increase in liability and decrease in company assets. where the company payment to debt will be increase and for increase cash flow assets need to release or sale , which lead to production shortfall. as you know the equity holder have right on company assets so to company stock price will goes down.