Free Cash Flow as Value Criterion Message Board

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Strategies & Market Trends : Free Cash Flow as Value Criterion

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To: jbe who wrote (80)	11/2/1997 2:17:00 AM
From: Pirah Naman	Read Replies (1) of 253

jbe: > what do "CF" and "CE" stand for Sorry - short hand for cash flow and capital expenditures. > ) My figures did not indicate that CPQ had great operating cash flow > -- just great FREE cash flow. IMpossible to have great free cash flow without great cash flow. > IBM's -- and SUNW's -- CPQ's, Now that you have the numbers you can compare again. But my point was never that any of them was better than another. My point was that your source is clearly wrong ont eh CPQ figures. Cash flow is higher than free cash flow - and even using the real cash flow values you can't get the free casg flow figures your source had. > 3) Which brings up another point: how is it that some companies (no > matter what source you consult) have lower price/free cash flow ratios than price/cash flow ratios, when the reverse is usually true (the average p/CF ratio for the S&P is about twenty points higher than the p/FCF ratio)? I have never seen this. If you can find me a single example in VL or S&P I'd be very interested. FCF = cash flow - cap exp. As you have written. > 6) Market Guide's Ratio Comparisons (only $5 per month for unlimited use) are unique. Deloitte and Touche has them (free, or at leat they were) - sorry, can't rememebr web address. www.msrn.com is also worth a look. > I agree that the 10-K's are the best source of all -- but you can't start with them. I agree. You do whatever screening method, but you gotta check results at the source, see if your screen tool is good. > Yet another ignorance-revealing question: what's the difference between "cash per share" and "cashflow per share" Cash per share in money sitting in the bank. If management is asleep at the weheel, it could be several years of FCF that they never figures out how to use. Pirah

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