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: Pirah Naman who wrote (218)	11/18/1997 10:04:00 PM
From: jbe	Read Replies (1) of 253

Pirah - You make some excellent points, and I would not argue with them. Would you mind expanding on the point you made in your last paragraph? Forgive my ignorance, but I am not quite clear where book value comes in here. As for "cash"(in the bank) and "free cash flow," I am actually aware that they are not identical. In practice, however, companies with good FCF tend to have a good deal of money in the bank, and vice versa. It seems to me there is not a single measure of a company's performance that one could not argue with. And perhaps one SHOULD argue with them all. On the other hand, there are zillions of stocks out there. It's not possible to examine them all in detail. Certainly one should be able to concoct some kind of screen or screens, using some admittedly imperfect parameters, to zero in on a few stocks that can then be investigated in greater depth (and, possibly, purchased!). Superior FCF and low debt are some of the major parameters I use (but by no means the only ones). Would you suggest some other method of locating potential winners? jbe

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