Finance / July 19, 2018 / Isabella Mccray
Current liabilities are used to determine a company's ability to pay off its short-term obligations as they fall due. Current liabilities are used to evaluate the efficiency and short-term financial stability of a company. So, it is inferred that current liabilities are a measure of a company's level of liquidity.
Free cash flow is the cash flow available to all investors in a company, including common stockholders. FCF provides a useful valuation technique investors often use to derive a firm's value or the value of a firm's common equity. Often, investors will calculate a firm's value using FCF valuation model techniques and subtract net debt to arrive at a company's equity value in a simple capital structure.
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