Explaining Free Cash Flow When Analyzing A Stock's Fundamentals

Everything Money
Everything Money
20.8 هزار بار بازدید - 3 سال پیش - Free cash flow is one
Free cash flow is one of our most important pillars and the one that we look at most when we do our stock analysis looking at a company's fundamentals. Not only is it our most looked at pillar, its one that our viewers ask the most about.

Free cash flow is determined taking a cash from operations and subtracting their capital expenditures. We do this to determine what we think the company's market cap should be compared to what it is presently. After we look at the last last five years and calculate what their free cash flow is, we take the average and multiple that by a number to determine the market cap.

The number we multiply by is typically determined by how fast the company is going. Our most basic valuation is done using the number of 20. The reason we use 20 is that is the typical number for P/E (Price to Earnings) that we look for. If a company is growing slower, we may use as low as 5-7, it all just depends on the company.

This is a great way to determine if a company is overvalued presently in the market and seeing where it should come down to. This is a great representation of evaluating a company and Paul uses Apple as the example in this video.
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Video editing by Rohan and Sharvari (The Tweaky Tales)

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3 سال پیش در تاریخ 1399/11/20 منتشر شده است.
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