Week 1 Discussion Question Week 1 Fin 571
1
Week 1 discussion Question week 1 fin 571 Free cash flow (FCF) can calculated using following formula: FCF = EBIT(1-Tax Rate) + Depreciation & Amortization - Change in Net Working Capital - Capital Expenditure Or FCF = Operating Cash Flow - Capital Expenditures As an investor perspective positive free cash flow always indicate that company has growth potential and customer has demand for its products or services. Sometimes Cash flow can be negative too and it is good for the company when they are making big investments and expect that it will be high return assets for the future growth. Best example to understand the negative cash flow is good it ‘amazon.com’ in most recent quarters they are reporting loss per share because of large investment for technology advancement, distribution network expansion and to develop could infrastructure to service future needs for their business partners and alliances.
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Transcript of Week 1 Discussion Question Week 1 Fin 571
Week 1 discussion Question week 1 fin 571
Free cash flow (FCF) can calculated using following formula:
FCF = EBIT(1-Tax Rate) + Depreciation & Amortization - Change in Net Working Capital - Capital Expenditure
Or
FCF = Operating Cash Flow - Capital Expenditures
As an investor perspective positive free cash flow always indicate that company has growth potential and customer has demand for its products or services. Sometimes Cash flow can be negative too and it is good for the company when they are making big investments and expect that it will be high return assets for the future growth. Best example to understand the negative cash flow is good it ‘amazon.com’ in most recent quarters they are reporting loss per share because of large investment for technology advancement, distribution network expansion and to develop could infrastructure to service future needs for their business partners and alliances.
