I find it perplexing that some investors view negative free cash flow as a red flag. I wrote a post on it recently and addressed the topic in a recent note to my subscribers
https://www.valueinvestorindia.com/2020/09/16/negative-free-cash-flow-is-often-a-good-thing/
Free cash flow can never be a formulae driven number. It depends on estimating maintenance capex - which is the amount of re-investment needed to maintain competitive position of a business. This in turn depends on the nature of a business
Asset heavy businesses like a Steel plant need regular capex to maintain unit volumes and be cost competitive. Asset light businesses like a Facebook need very minimal maintenance capex. There is no fixed formulae to estimate this. It requires a deep understanding of the business
You can follow @rohitchauhan.
Tip: mention @twtextapp on a Twitter thread with the keyword “unroll” to get a link to it.

Latest Threads Unrolled:
Those who think consciousness raising & movement building are disconnected, or even a distraction from electoral politics have not paid attention to the history of social change.In this thread, we
Read more
The 2020s will be known as the Remote Work decadeA few predictions of what is likely to emerge[ a thread ] Third Space: Office and Working from Home will
Read more
1/29: Have you ever had a concept explained to you that helps frame complex issues you’ve been wrestling with and opens your eyes to new possibilities? A concept that I
Read more
By continuing to use the site, you are consenting to the use of cookies as explained in our Cookie Policy to improve your experience.