Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Chuzzlewit who wrote (16871)	3/27/1998 8:59:00 PM
From: jbe	Read Replies (1) of 95453

Paul, you write: ...You need to look at multi-year cash flow projections, not just one year projections.. <Gulp!> I have to admit I don't know how to do multi-year cash flow projections. I am just a scribbler by trade. But you are a financial analyst -- can you explain? And I would like to repeat the question I posed in my first post: can a "capital recovery rate" calculation serve to supplant and/or augment the use of the free cash flow criterion in this business? Or the system you describe in your post #168906? (The problem with your method, it seems to me, is that one would have to be a CPA or a financial analyst to employ it.) I'd like an answer to this one, because it is clear that one has to make allowances for different sectors in different ways. When you are dealing with retailers, for example, you simply can't expect high profit margins; they make their money on volume. With oil service stocks, the free cash flow criterion -- which works wonderfully with cement makers, for example -- should perhaps not be applied so strictly. Hmm??? jbe

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