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Technology Stocks : Citrix Systems (CTXS) -- Ignore unavailable to you. Want to Upgrade?

To: Saturn V who wrote (7347)	12/5/1999 7:31:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 9068

Free cash flow is synonymous with disposable cash flow. It is the amount of cash a company can periodically part with without adversely affecting operations. In general, free cash flow is a good surrogate for dividends, which is the basis for valuations. Established companies that consistently increase free cash flow are true growth companies. The problem with earnings is that they are fictional metrics invented by accountants, and subject to a wide series of estimates like depreciation, reserves for doubtful accounts, and the like. You can cut right through that stuff by analyzing cash flow. Note that the analysis of free cash flow is requires that you ignore non-operating sources of cash such as interest earned and gains on investments, but you include investments in property, plant and equipment and cash expended for acquisitions. The only question is have the acquisitions and investments in new business ventures been wise investments? That's precisely what free cash flow is designed to measure. Wise capital investments increase free cash flow. TTFN, CTC