Free Cash Flow as Value Criterion Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Free Cash Flow as Value Criterion

Public Reply Prvt Reply Mark as Last Read File

Previous 10 PreviousNext

From: Harshu Vyas	9/16/2024 5:42:51 AM
	of 253

Ok, I'm defining free cash flow a new way now: FCF = Adjusted net income (adjusted for a normalised, true D&A expense) after changes in working capital* (this can be adjusted, too, in industries where working capital cycles are more easy to map out) less total capital expenditures (not just maintenance capex). Only then, can the cash be said to be "free." What I suspect is that not many companies can continually yield high levels of "free cash" - any company that does have that earning power interests me deeply. It's possible in a few months I come back to redefine it again. Appreciate any thoughts if anyone is on this thread. What I mean here is if amortisation isn't a real expense, it should be added back like it is on the cash flow statement. However, if the cost is real and not an accounting fiction, it cannot be added back. Also, if depreciation accounting is too conservative, you adjust it to make it more real. * It's possible that this won't help analysts in certain industries in which case you skip it. But, for most companies, I think it's an important step.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 PreviousNext