Answer to Question #6767 in Economics of Enterprise for LaMarcus Streeter
Select a company in which you would like to invest and use the Internet to research how the company is currently using its free cash flow.
Determine how the company you selected should address its free cash flow, either through distributions to shareholders or repurchasing of stock. Explain your rationale.
I have chosen Relax Investments Financial Services Ltd (Relax-Investments.com) for investment. Free cash flow is a measure of financial performance calculated as operating cash flow minus capital expenditures and represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base. For me as an investor analyzing free cash flow of the company that I want to invest is important because I understand that free cash flow allows a company to pursue opportunities that enhance shareholder value. So I have chosen Relax Investments Financial Services Ltd because in my opinion this company generates maximum of cash and from the other side it has minimum of money required to run or expand its business. They are operating online, so the expenditures will be probably just hosting and domain payments. So they have nearly all the money in free cash flow with the minus of their liabilities and these expenditures. As far as I understand they are currently using their free cash flow to re-invest in Forex trading system. In this case we see that the company doesn’t need to re-purchase the stock, it distributes the revenue to the investors and if their work is really based on the values and principles (display in all of our everyday dealings and reinforces our dedication to provide a completely safe, transparent and secure trading environment for all of the clients) the happy clients will always leave the part of their benefit for re-investment. I think it’s a new way of investment facilities available for the clients worldwide and that’s why it’s my choice.