help please.

4) If free cash flows are expected to be negative for an extended forecast, the analyst may have more confidence using a residual income valuation instead.

If free cash flows are expected to be negative for an extended forecast, the analyst may have more confidence using a residual income valuation instead.

True

False

1 point Sharpe, Alexander, and Bailey put forward the idea that companies may go through three phases. In the mature phase, company reaches an equilibrium in which irvestment opportunities on average just earn their _ . This means will approach the required return on equity, and earnings growth, the dividend payout ratio, and the return on equity levels that can be sustained long term. The dividend and earnings growth rate of this phase is called the .The Gordon growth model is a potential tool for valuing this phase. In a growth phase, a company invests in expanding operations to take advantage of markets which expand generate profit margins, and produce supernormal earnings growth but they often have payout ratios of companies in this phase are often low or even zero. As the company's markets mature or as unusual growth opportunities attract competitors, earnings growth rates eventually decline. A company may attempt and succeed in restarting the growth phase by changing its strategic focuses and business mix - IBM selling their growth rates eventually decline. A company may attempt and succeed in restarting the growth phase by changing its strategic focuses and business mix- IBM selling their laptop business to Lenovo provides an example of trying to restart a growth phase. Companies may also be in a transition phase, when earnings growth due to competitive pressure or market saturation. In this phase, earnings growth rates may be above average but declining toward the growth rate for the - Capital requirements typically decline during the phase, which can result in positive free cash flow and the initiation or increase of dividends