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John Wiley & Sons Inc. Message Board

  • oystergrouch oystergrouch Aug 17, 2002 12:41 PM Flag

    And hello to you

    Thanks for the friendly voice in this solitary place.
    I was attracted to JWa mostly because of its ownership of the DUMMIES series. I believe in Dummies. There are so many of us that the possibilities are infinite.

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    • I have not had the time to look into this as deeply as I wish. Stuff a work and looking to the other things of life has kept me on the run. Also this board was down for a few days.

      I rough figures I came to 4.8 mill. I have had a hard time looking at liquid assets and cash issues.

      As to the real cash-on-hand available at this minute, I do not have a clue since there reinvestment in inventory is unknown. However the FCF generated in the past four quarters appears to be near 5 mill. However Yahoo lists the cash assets at 2.x mill. This is a little confusing to me. Whatever the real figure is the CEO seems to have said recently that they are ready to start looking into a purchase of another company. This they also have done within the past year or so.

      What was your figure?

    • "Quick and dirty," I get about $5.5 million for the trailing 12 months. Subtract net cash from the 6/30 b/s and you get a free cash flow yield on enterprise value of almost 18%! I have purposely ignored cash flow from operating activities because I am unable to determine a normalized level of changes in inventories, receivables, etc. Up one year and down the rest.

      The art part of this calculation is to determine a normalized (average over the next several years) level of free cash flow. To me, the question is whether SGDE, who had a cumulative EBIT of $1.6 million (lousy!) over the 3 years 98-00, will be able to show growth over the next five years, or if this is the cyclical high water mark for earnings and free cash flow. Good luck with the answer; SGDE is tough to model and I'm not convinced the earnings are sustainable.

    • Those formulas are the standard that most analyst use, and for now I'll go along with you. I'll pose my question again, what is the free cash flow for Sportsman? (annual free cash)?

      ** note: I know many view these formulas as the standard for free cash, but for most companies, if you actually tried to take this cash out of the company, one would quickly realize that they have to modify their formula. Warren Buffett uses the formula, but he makes a note of caution to the user. I guess what I'm saying is that the formula is a good starting point in getting to "real free cash flow."

      Anyway, come up with a number (for annual free cash), and then I'll match it to mine, and we can walk through the analysis together.

    • Thinking about the message yesterday I did not want to appear that I was speaking with an attitude. I know that there are things that are known to one by one name and to another by a second name. I have looked further and have found a posted article by Paul Stapleton. He uses the following formula for the overall FCF.

      "Free Cash Flow = Net Income + Depreciation Amortization - (Capital Expenditures + Additional Working Capital). "

      He goes on to say "Let's call this the Free Cash Flow. I use Free Cash Flow to value businesses. This number recognizes that, over the long term, a business must reinvest in its plant and equipment."

      This from http://www.ispreport.com/bwjune97.html

      I understnad his approach and where he si going with this, but wanted to check this out with your terminology. One would argue that this calculated value is not the Free Cash Flow but rather the Cash on Hand, or a statement of a Cash Position.

      Is the Stapleton formula more along the line of what you use?

    • The easiest place to look is
      http://www.fool.com/portfolios/rulemaker/1999/rulemaker991210.htm

      "Quite simply, free cash flow is the cash that's left over after everything -- bills from suppliers, salaries, expenses for the annual holiday bash, new equipment to expand the business -- is said and done. In theory at least, free cash flow is the amount of cash a business could issue to shareholders in the form of a dividend check.

      To calculate free cash flow, all you have to do is go to the cash flow statement and find the line called "cash flow provided by operations," also known simply as "operating cash flow." Once you've found that, all you have to do is subtract net capital expenditures and what's left is free cash flow. Nothing to it. Really, it's not as tough as you might have it cracked up to be."

      From this article from the Motley Fool online there is more in a two part series in the calculation and use of the free cash flow. If I then follow the example in the article and read the quarterly report I get the figure that I sent. Where are the Fool author and I off base? Thanks and have a good Thanksgiving as well.

    • You need to do some research on what free cash flow is and how one calculates it. From there we can talk. Good Luck and Happy Thanksgiving.

    • In looking at the Sept 30 2002 10-Q doing the evaluation I, I and the one doing the evaluation on this, the Net Income Applic. to Common Stock. That appears to be the cleanest figure and the most true net figure for the free cash flow. This was 269,000 at the time of reporting.

    • After I saw your post, I ran the numbers and.... Maybe we can start with this. What does your investment club estimate the free cash flow of SGDE to be?

      I have a number already, and I look forward to your reply.

    • I have looked at the numbers you ran on jwa and find them valuable. Conservative yes but better that then pie in the sky. Have you ever looked at SGDE? I have looked at them and run numbers and find a good P/E and Price to Book. The growth is interesting and the business model they are working appears to be good.

      If you have done any analysis on them I would appreciate any work you have on them. I know that it is another business and on another line besides books and education but there is a common link in the internet parts of the two companies.

      The part that I speak of is that jwa is selling and distributing on the Net and SGDE is selling product on the net as well. Both appear to be companies that have other sources of revenue, sales outside the internet and both appear to have interest in growth. Any work done on SGDE?

      If anyone else have info as well, I would welcome it. Apologies if this is pumping a stock on this message board. If it is I will not do this again. Really I would like information if you have it.

      Thanks...

    • I agree with you. That was a very arrogant Post. It does not seem typical of this Board. Hope you stick around. The conversation on this board has just started.

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