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To: Mike Buckley who wrote (7332)	12/4/1999 5:19:00 PM
From: Chuzzlewit	Respond to of 9068

Mike, I assume you would narrow it down to free cash flow or at least operating cash flow Yes! I watch both very closely. Free cash flow is too lumpy to use in raw form, so I smooth it using regression analysis, but it is the basis of the valuations I do. In order to account for the change in free cash flow per share I use historical (split-adjusted) shares. That avoids the distortions that are created using restated financial information that derives from pooling of interests. [For those on the thread unfamiliar with the concept of operating cash flow, it is the cash generated from operations. First, you calculate EBITDA by adding back interest, taxes, depreciation and amortization, and non-cash charges to earnings. Next, you subtract non-operating earnings (like interest or gain or (loss) on investments, sale of assets, etc.). Once you have EBITDA you subtract increases in non-cash current assets (like A/R and inventories), and add back increases in current liabilities (excluding debt). That gives you operating cash flow. To calculate free cash flow, subtract the cost of purchasing property, plant, equipment, and business acquisitions (including merger costs). You can get all of this information from a company's 10-K].