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Choosing An Acquisition Target The actual and forecast free cash flows for Pathology Lab A and Pathology Lab B are as follows: Free Cash Flow

Choosing An Acquisition Target

The actual and forecast free cash flows for Pathology Lab A and Pathology Lab B are as follows:

  • Free Cash Flow of Pathology Lab A

Actual: (Indian Rupees in thousands):

2018: 1528

2019: 1540

2020: 1486

Forecast: (Indian Rupees in thousands):

2021: 1333

2022: 1422

2023: 1470

  • Free Cash Flow of Pathology Lab B

Actual: (Indian Rupees in thousands):

2018: 1464

2019: 1452

2020: 1374

Forecast: (Indian Rupees in thousands):

2021: 1514

2022: 1624

2023: 1717

Which lab should Metropolis choose as a better acquisition target if both labs are available for purchase at the same price?

Pathology Lab A

Pathology Lab B

Hint: solve it based on the free cash flow only

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