Free cash flow is what drives business growth. The intrinsic value of a business is all of the future free cash flows that business will generate from now until eternity, discounted back to present value. This week, we look at how net income becomes the top line of the cash flow statement. We also go through several adjustments made in this section which convert net income into cash flow from operations.
Motley Fool Senior Analyst John Rotonti continues his discussion on the most important financial statements, focusing on the cash flow statement and what it reveals to investors. In part two of this two-part series, Rotonti discusses: - How net income becomes free cash flow - The choices companies can make with free cash flow (and why investors should care) - Margins that can indicate the health of public companies Bonus resource! How Net Income Becomes Free Cash Flow: https://www.fool.com/investing/general/2014/09/24/reconciling-net-income-to-free-cash-flow.aspx
Stock discussed: CMG Host: John Rotonti Producer: Ricky Mulvey Engineer: Rick Engdahl
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