easy · Corporate Credit Analysis
Why do credit analysts often focus on FCFF (or unlevered FCF) when comparing companies in the same industry?
- It allows for a 'like-for-like' comparison of the operating efficiency of the businesses, regardless of how they are financed.
- Because FCFF includes dividends, which are the main concern for credit analysts.
- Because FCFF is always a larger number than FCFE and makes the industry look better.
- It is required by the SEC to use FCFF in all industry benchmark reports.
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