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10:54 pm
November 23, 2010
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Jae Jun
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I think it is your browser.
Click here.
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4:13 am
November 23, 2010
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Ashley Wilis
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hi everyone,
@ jae jun
Well Whenever I click on your provided link a blank page open up, Is it moved somewhere else, or It is the problem with my browser ?
:(
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11:37 am
November 22, 2010
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Jae Jun
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Every investing book requires at least a little knowledge into accounting terms. A single book certainly cant teach you everything from the beginning to the end so it is always up to the reader to take further action.
Example of non cash charge is an impairment.
A company bought a company and overpaid. $1M is then added to goodwill, but after 3 years, they finally realize buying the company was a stupid move and the value of the goodwill is really $0m.
Although the balance sheet will go down, in terms of cash flow, the company did not spend $1M. This is a non cash charge.
One item item includes something like a lawsuit. A company has to pay a fine of $1M. This is not something that will occur every year so when you calculate cash flow, you can ignore this expense.
Same with if the reverse was true.
A company wins a lawsuit and receives $1M. This isn't part of operations and so cannot be included.
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2:23 am
November 22, 2010
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B
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This is the same issue I've had with Joe Ponzio's F Wall Street. I've been applying the Owner Earnings and Buy-and-Hold Valuation as described in the book. But I think the book doesn't do a thorough-enough job explaining how to find "non-cash charges" (or what Paul refers to as "one time items") when actually looking through financial reports.
First of all, I think Ponzio assumed a little too much about the reader's knowledge in that section of the book – I couldn't even figure out where to look for "non-cash charges" until I went back a couple chapters to the Patterson Dental example and deduced through elimination what items constituted non-cash charges.
In one of Jae's previous posts, he lists:
"If the one time items are non recurring expenses, you will want to add it back in. On the other hand, if it is a one time income, you will want to subtract it out."
Still unsure how to apply this. For example, "change in accounts receivable" – how would I know if the change was a result of a one-time charge? Maybe I'm confusing "one time items" and "non-cash charges"?
Anyway, I think what could really help me understand "non-cash charges" is to see more real-world examples of what line item descriptions belong to this bucket.
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1:53 pm
August 6, 2010
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Jae Jun
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Hey Paul,
Owner earnings and FCF certainly is similar but there are subtle differences such as one time charges.
I wrote about the differences in the following post.
http://www.oldschoolvalue.com/…..-flow-fcf/
As for finding one time items, the name on the financial statement won't always be the same for every company.
On my spreadsheets, it is labeled as "Special Items" but will have a more detailed name in the financial statements.
Just a matter of going through them and finding where and what it is.
This number is usually hidden in most financials but it is always written and explained in the reports. COuld be from a one time tax benefit, or sale of assets, or liquidating their portfolio etc. Varies significantly and requires separate investigation.
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10:20 am
August 5, 2010
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Paul2310
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I have been facing some confusion for a while now over Owners Earnings and I was hoping somebody could help me with some answers.
My first question is how is Owners Earnings different than FCF? I see that the equations are different, but in reading various articles on this site and the F Wall Street site, it leads me to believe that they are the same thing. If they are the same thing, why are my calculations never coming out equal. Could somebody please explain the differences and advantages/disadvantages to them?
I am also struggling with the "one time items" portion of the Owners Earnings equation. When looking at the financial statements, I can locate Net Income, Depreciation and Amortization and Capital Expenditures alright. One Time Items confuses me though. Sometimes I can find it and sometimes I can't. What really confuses me is that when I look at financial statements on Yahoo Finance, it might list One Time Items but when I go to the companies 10K report or Morningstar, I can't find it. It seems like there is no consistency whatsoever. Could somebody please shed some light on One Time Items as well?
Thank you in advance!
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