In an absolute valuation model, the primary focus is on which aspect?

In an absolute valuation model, the primary focus is indeed on future cash flows. This model aims to determine the intrinsic value of an asset based on its anticipated ability to generate cash flow in the future. The premise is that the true value of an investment is derived from the present value of the cash flows that the asset is expected to produce over time.

By focusing on future cash flows, analysts project potential earnings and cash inflows, which are then discounted back to their present value using an appropriate discount rate, often reflecting the cost of capital or required rate of return. This approach allows investors and analysts to assess an asset's value independent of its market price, enabling them to make informed decisions about buying, holding, or selling.

The other aspects mentioned, such as risk management, market liquidity, and stock volatility, are certainly important considerations in the broader context of investing and market analysis, but they are not the direct focus of absolute valuation models. Instead, they might influence how cash flows are viewed or how the discount rate might be adjusted, rather than the underlying principle of valuing future cash flows themselves.