TITLE

Tying Free Cash Flows To Market Valuations

AUTHOR(S)
Howell, Robert A.
PUB. DATE
May 2002
SOURCE
Financial Executive;May2002, Vol. 18 Issue 3, p17
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The article is a companion piece to "Fixing Financial Statements: Financial Statement Overhaul," by Robert A. Howell, which is in the previous issue of this journal, and presents the author's views on using free cash flows in determining market valuations. Net present value (NPV) in future cash flows can be maximized by: increasing cash earnings and organizational value or by cost management; reducing investment and managing working capital; and employing financial management that minimizes the company's cost of capital and uses free cash flows to increase future value. The metrics for monitoring free cash flows--which involve the net operating profit after taxes, weighted average cost of capital, and return on invested capital--and creating shareholder value are mentioned.
ACCESSION #
11873420

 

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