Stock forum

Jae Jun said:

lol challenge taken.

This is how the website calculates FCF = cash from operations – capex

 

Cash from operations = Net Income + Depreciation/Amortization +/- Other

 

where Other is calculated as

Other = Inventory + other working capital + non-cash

Inventory = change in inventories

other working capital = change in receivable + change in other current assets + change in payables + change in other current liabilities

non-cash = operating gains + other non-cash items

Unfortunately that's one of the formulas I've tried and I don't get the same numbers. 

Nic simple Example (and a great business with pricing power): http://www.advfn.com/p.php?pid…..ASDAQ:APOG

When I run through the process you have above I don't get anywhere near the FCF listed.

Cash from operations across the 5 quarters listed at that link varies from 26.8 to -9.6 million; Change in inventories is in the 1-5million range per quarter with total change in working capital (all the other stuff up there) in the 10-17m magnitude range; Capex is 7.6m to 28.5m.

Yet the site is reporting FCF from -60.9m to positive 78.1m. Those numbers seem ridiculous for the business in question (78m cash flow on 148m revenue with insignificant depreciation or change in working capital) which is what drew my eye in the first place.

The closest I've gotten to figuring it out is  that perhaps they are adding back in the "purchase of short-term investments" term (it almost makes some columns match), but without adjusting for the sale of short-term investments so that turning over cash a few times during a quarter adds that cash to FCF a couple times.

Even stranger is if you look at the net cash flow section of that page. For "beginning of period" they are reusing the annual number – which is fine and is one of the ways companies report it, but then they seem to perhaps be using the cash for the year to date in the FCF calculation? At first I thought maybe they were doing FCF year-to-date, but that doesn't seem to add up either.

Presumably I'm missing some possible way of thinking about it!

Premium user here.

I've been digging around in the financial statements spreadsheet as well.

I thought I'd found an error in calculation of free cash flow (FCF), then Jae sent me a link to the web site the excel pulls data from (advfb.com). Sure enough, the spreadsheet matches the website.

Unfortunately the website doesn't explain where they are getting numbers from. I have tried every FCF formula I can find, for example, but can't figure out where they are getting their numbers from. 

I challenge anyone to figure out how that website calculates FCF!

 -darkgreen

Hi! Mrbook,

If Jae is not available for working on his document of the formulas so far, could you please post your findings of your best guess of the formulas? Maybe Jae later can comment on your best guess.

And I will also post my findings of these formulas before this weekend.

Thanks.

Regards

T.I.

T.I.; I emailed Jae a list of all of the formulas that I was able to verify for "Financial Statements" and for "Net Nets". I yelled at him and told him that its good practice to always include the formulas that were used in any spreadsheet that you produce. Hopefully from now on he will attach those formulas along with formulas for all of the other spreadsheets when the next premium updates get send out.

Meanwhile email Jae asking for the formulas that I emailed him. Also Jae or anyone else should not assume that the formulas that were used in "Financial Statements" or any other spreadsheet are the same formula definations that are used from http://www.Investopedia.com. That's why its good practice to always include formulas attached separately with each spreadsheet so that you have them handy when comparing Jae's spreadsheets with other sources!!

Bottom line: Everyone else besides me get on Jae for not doing this already! He is tired of hearing from me! Perhaps if others also complain about what I am saying Jae will be motivated to heed my suggestions!!

Hi! Jae,

Could you please post your answers to MrBook's following questions by September 5, 2010?

Thanks.

T.I.