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Strategies & Market Trends : Value Investing
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To: Nya_Quy who wrote (62679)10/10/2019 7:37:40 PM
From: William Cloutier1 Recommendation

Recommended By
E_K_S

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I totally understand unlevered operating FCF and why you want to use it. I think that ignoring or accruing growth capex is much more dangerous when someone tries to forecast and discount but I don't think it's what you do. Let's say my initial message was more in line with this thought: we need to remember the way we calculate something and its caveat. I was just raising what I think is an issue with the way we may operate with a certain valuation model.

My definition of growth capex is: total capex minus any fraction, we can think of, that can represents maintenance capex. Dividing capex is like a form of accrual accounting: maintenance capex is immediately "expensed" and growth capex is placed on the balance sheet. So, if we modify a cash-based measure with accrual accounting, we need to think how it can distort the picture we're trying to draw.

Good investing
Will
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