A Research On Free Cash Flow And Investment Efficiency By Y Company

The production and operation,capital structure and resource allocation of an enterprise are all affected by investment activities.The effectiveness of investment is one of the criteria for measuring the healthy development of a company.Enterprise value is the most important part of social value.Whether the investment efficiency is high affects the comprehensive competitive position of the enterprise or even the economic development of the whole society.Investment efficiency is affected by many factors,and free cash flow is one of them that cannot be ignored.Free cash flow provides a prerequisite for over investment.For companies with a shortage of free cash flow,and external financing is also difficult,the result is that the company cannot meet normal investment requirements,and investment at this time must be inefficient.The mechanism of action between the two is the aspect of key research.In a realistic market economy,free cash flow will promote or hinder companies’ foreign investment.Under the theory of information asymmetry,due to the inequality of the information held by the two parties in the transaction,the party with more information will damage the interests of the other party in order to seek more of their own interests,further leading to the two adverse phenomena of adverse selection and moral hazard,making the enterprise Investment adds many uncertain variables,leading to inefficient investment problems.Take company Y as an example to conduct the research.First,the background and significance of the research questions are presented.The existing researches on free cash flow and investment efficiency are analyzed and summarized from domestic and foreign literature.The basic concepts of investment efficiency and free cash flow are understood.Relevant theoretical foundations provide theoretical support for subsequent case analysis.Secondly,the specific investment situation of company Y is given through the collection,collation and analysis of various financial data,and then through the evaluation system of investment efficiency,various indicators of the effect of free cash flow on investment efficiency are evaluated.In conclusion,with a view to guiding enterprises to make reasonable investments.