I have a way of calculating oner earnings which involves no calculations. The one we're most concerned with here is operating cash flow. And that will be a number that you can look out across time, like if youwere to go over to our tool box,. You would see it across time. In other words, companies can have really astonishingly good years for a reason that has nothing to do with them. They're not going to really be growing that fast. So the ea thin on e turnis okthe second thing is, i am using historically reasonable owner earnings. I'm using historically reasonable operating cash Flow. Ok. That means that when you're looking at a business,
You’ve done the initial Four Ms analysis of companies on your watchlist, but your work is not complete. The next step in the researching process is critical, and tells you whether or not the business is worth purchasing. Being at this point in your analysis means that you’re highly confident that the company is going to be larger and more productive in ten years. Today, Phil and Danielle discuss this next step in the research process, and cover how to calculate margin of safety using the ten cap valuation process.
For show notes and more information, visit www.investedpodcast.com.
Learn more about your ad choices. Visit megaphone.fm/adchoices