As with all things in life, building a solid investment strategy around Free Cash Flow (FCF) is not as simple as it may seem. Here are 3 rules to follow.
This ETF’s methodology is worthy of more investors’ attention because it uses ROIC and FCF to find quality companies that are significantly undervalued.
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.