Silicon Investor (SI) -- The First Internet Community

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 -- Ignore unavailable to you. Want to Upgrade?

To: jbe who wrote (188)	11/10/1997 7:32:00 PM
From: Reginald Middleton	Read Replies (4) \| Respond to of 253

<<Okay, with that being said, what is a fair price for Compaq shares.> You tell me!! (As a Compaq owner, I can only hope that the fair price is higher than today's price.)> I asked the question to prove a point. You cannot ascertain a fair price of a company by simply looking at free cash flow. You have to project cash flows out to a future date and discount them back to the present using an appropriate discount rate (usually the WACC - weighted average cost of capital). Earlier you were attempting to differentiate between FCF and "my" methods, when in actuality pure FCF tells you nothing outside of how much money is in the company's checking accounts. rcmfinancial.com