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Strategies & Market Trends : Value Investing

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From: Mattyice	3/11/2014 1:47:53 PM
	Read Replies (2) of 78731

COROA - Cash Operating Returns on Assets I'm not sure if this is off topic, but wanted to discuss the uses of this metric. Ive been trying to work on how to value some of these mlps trying not to get scared off by how they issue equity and debt to fund distributions - seems like a toxic combo imo - but never the less i think prudent mlps can provide some long term value. I stumbled upon article in accounting journal a few weeks ago then saw an article posted yesterday on fortune by guy who wrote it. Accounting makes my eyes glaze over sometimes but never the less interesting to think about finance.fortune.cnn.com Cash Operating Returns on Assets - tries to figure out pure cash returns (reminds me of the concept cash on cash returns) ie firms cash generation ability relative to the cash invest in it This bro explains official Cash Flow is calculated after cash income taxes, because falling taxes can create the illusion of progress - interest is also subtracted. He states the size of annual interest levy reflects the level of leverage. The formula in a nut shell is - Cash Flow from Ops + Cash Taxes + Cash Interest (numerator) / Total Assets from Balance Sheet + Accum Depreciation (accts for assets still producing but fully expensed) Ciesielski thinks " It's best measure of pure profitability. If the number has been high for a while, and is either staying high or improving, evidence is strong that the company is generating strong returns from its new investments. That's the quality that Buffett looks for "

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