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Strategies & Market Trends : Free Cash Flow as Value Criterion -- Ignore unavailable to you. Want to Upgrade?

To: jbe who wrote (47)	10/29/1997 7:45:00 PM
From: Pirah Naman	Read Replies (2) \| Respond to of 253

jbe: I am glad that they give all the different numbers. While it might seem more convenenient if they just gave the answer (FCF) then it would be harder to recognize if somethign was askew. > Are you simply subtracting the "capital spending per share"item to > get your free cash flow number? That would be the simple way to get the "cash earnings" described by GADR. To get the actual free cash flow, all you'd have to do is add in the change in working capital from the previous year. > And how does Value Line come up with its number for next year's > capital spending? Same way they get all the other numbers for next year. By working with the investor relations department at the company to get a forecast. Of course their estimates are subject to error - no company knows exactly what its sales and expenses will be. But in my observation VL's (really, the analyzed company's) predictions for the forthcoming year are pretty decent. Bear in mind that every company is updated every quarter, so if you track a company you will see VL's changes to its estimates. At least with the larger companies those estimates don't seem to change much from quarter to quarter. Though the cyclicals do seem to jump around a fair bit. Pirah