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Myers Industries Inc. Message Board

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  • Capital_Gains_Tax Capital_Gains_Tax May 5, 2000 10:52 AM Flag

    Free Cash Flow

    OK, what I did was look at the 10K, at 12/31/99
    the company has Long Term Debt of
    280,103,906.

    From the news release, they indicate that Long Term
    Debt is 273,288,754 or roughly 7,000,000
    less.

    Is that "Free Cash Flow" I'm not quite certain what
    that term means. Calculating a statement of cash flows
    is almost impossible unless you know what the
    depreciation and amortization is.

    Condensed Balance
    Sheets force one into making assumptions that I am
    reluctent to share, and you should be reluctant to rely
    on.

    Anyway, they are making money, and maybe we can get a
    bigger dividend [7 cents???] out of the Board of Dirs.
    this year.

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    • The latest 10K will be out next week and cash flow analysis and conclusions should be drawn from that.

    • Here is a quick and dirty example of how to
      calculate free cash flow...

      Start with Operating
      Earnings or Earnings Before Interest & Taxes (EBIT)
      Tax
      effect it... meaning use the corporate tax rate to
      calculate the taxes.
      Subtract taxes from EBIT.
      Now
      you have Net operating profit after tax
      (NOPAT)

      Add back depreciation & ammortization from the
      statement of cash flows.
      Subtract Capital
      Expenditures
      Subtract changes in working capital.

      You now have
      debt free cash flow.

      I asked if anyone knew
      MYE's free cash flow, because some companies report it.


      Just as an FYI, calculating Free Cash Flow is the
      first step in the process of valuing a company by the
      Discounted Cash Flow Model. I follow FCF very closely
      because it is a far more important measure of a company's
      performance than earnings. First rule of finance is CASH IS
      KING. Earnings are an accounting construct; they have
      very little to do with cash generation. This is even
      more important that the second rule which states.. BUY
      LOW SELL HIGH!!! :-)

 
MYE
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