Free Cash Flow (FCF): Explanation & Examples

There are many ways to calculate free cash flow. Most approaches are short cuts to our more comprehensive approach to the calculation. The formula for FCF can be seen in Figure 1. For more on FCF, see within.

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Economic Earnings: Explanation & Examples

To derive economic earnings, 30+ adjustments must be made to accounting earnings. These adjustments remove items hidden in the footnotes and MD&A of annual filings and close loopholes within GAAP accounting.

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How To Calculate Invested Capital Webinar

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In this webinar, we provide details and models showing how to calculate Invested Capital and how it relates to Net Operating Profit After Tax (NOPAT) and return on invested capital (ROIC).

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How To Boost American Express (AXP) Value By $50 Billion

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Thesis: Management can boost the market value of American Express in the amounts below[1] by aligning the firm’s strategy and performance compensation with real cash flows or what we call return on invested capital (ROIC).

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Long Idea: Wells Fargo & Company (WFC)

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In the search for safe investments in today’s volatile markets, investors should focus on companies that have a history of creating shareholder value, the ability to earn quality returns on capital, and an undervalued stock. This week’s Long Idea, Wells Fargo & Company (WFC) not only fits the description of a safe investment, but its shares are also greatly undervalued.

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Why the Fed’s Stress Test Isn’t a Stamp of Approval for Investors

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In this podcast, CEO David Trainer will explain why many of the big banks will not be as good investments now as they have been in the past.

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David Trainer Explains Why Big Banks Are No Longer an Attractive Investment

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David Trainer discusses why big banks are no longer an attractive investment.

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Danger Zone: Value Investors

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All Cap Growth Style

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The All Cap Growth style ranks fifth out of the twelve fund styles as detailed in my Style Rankings for ETFs and Mutual Funds report. It gets my Neutral rating, which is based on aggregation of ratings of 2 ETFs and 448 mutual funds in the All Cap Growth style as of January 28, 2014.

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Danger Zone: Momentum Investors and the Financial Sector

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As regulators dole out punishments that fit the crimes, they are finally closing many of the illegal trading loopholes that have driven so much of Wall Street profits over the past decade.

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Best & Worst ETFs and Mutual Funds: All Cap Value Style

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The All Cap Value style ranks fifth out of the twelve fund styles as detailed in my Style Rankings for ETFs and Mutual Funds report. It gets my Neutral rating, which is based on aggregation of ratings of 2 ETFs and 238 mutual funds in the All Cap Value style as of October 17, 2013. Prior reports on the best & worst ETFs and mutual funds in every sector and style are here.

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Danger Zone 8/26/13: First Trust Value Line 100 ETF (FVL)

First Trust Value Line 100 ETF (FVL) is in the Danger Zone this week. FVL is another example of a supposedly “passive” ETF that purportedly tracks an index but actually resembles an actively managed portfolio. FVL’s methodology tracks an index, but it is an index in name only.

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Off-Balance Sheet Reserves – Invested Capital Adjustment

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Reported assets don’t tell the whole story of the capital invested in a business. Accounting rules provide numerous loopholes that companies can exploit to hide issues and obscure the true amount of capital invested in a business over its life.

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Non-Operating Tax Adjustment – NOPAT Adjustment

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Without removing the tax impact of non-operating items, one still gets distorted picture of a company’s operating profitability.

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Danger Zone 6/17/13: Citigroup (C)

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As the market bulls continue to look to rising interest rates as a sign of future strength for Citi, they ignore the fundamentals of the market and of Citi’s weak profit history.

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Non-Operating Income Hidden in Operating Earnings – NOPAT Adjustment

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Non-operating items in operating income are unusual gains that don’t appear on the income statement because they are bundled in other line items. Without careful footnotes research, investors would never know that these non-recurring income items distort GAAP numbers by artificially raising operating earnings.

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Asset Write-Downs Hidden In Operating Earnings – NOPAT Adjustment

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Asset write-downs are unusual charges that don’t appear on the income statement because they are bundled in other line items. Without careful footnotes research, investors would never know that these non-recurring items distort operating earnings by overstating core-operating costs.

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Danger Zone 6/3/2013: Perma-Bears and Bubble Alarmists

I am optimistic about the U.S. economy and I don’t believe we are in bubble. Too many investors and economists are looking at the economy the wrong way.

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How To Find the Best Sector ETFs

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Finding the best ETFs is an increasingly difficult task as there are more and more to choose from every day.

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Best & Worst ETFs and Mutual Funds: Large-cap Growth Style

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The Large-cap Growth style ranks fourth out of the twelve fund styles as detailed in my Style Rankings for ETFs and Mutual Funds report. It gets my Neutral rating, which is based on aggregation of ratings of 23 ETFs and 717 mutual funds in the Large-cap Growth style as of May 2, 2013.

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