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 (149)	11/5/1997 8:53:00 AM
From: Andrew	Read Replies (2) of 253

jbe, it might be interesting to see if your screens can rank firms by what you might call their "FCF margin". That is: FCF margin(%) = FCF/Revenue*100% Even though this gives no information about valuation, it will allow you to compare firms on an "apples to apples" basis. It will show which companies are most solidly "in the black". A useful combination might be a method where you try to find companies with "high" FCF margin and "high" FCF growth rates, while being valued at "low" P/FCF ratios. This might be very informative about relative valuation. Andrew

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