[...] F Wall Street and The Fives Rules book introduce the concept of Discounted Cash Flow which was also the starting point of the ongoing investing spreadsheet project available for [...]

[...] Discounted Cash Flow [...]

[...] the key that most investors forget. We use FCF in a discounted cash flow valuation, not to measure how much money is left over for us, but to find the true profitability of the [...]

[...] won’t explain what a DCF or discounted cash flow is as you can follow the link for a fuller discussion. Table of Contents:Valuing a Stock with the [...]

I prefer to use the Buffett’s definition of owner earnings which is why i don’t include cash from other operations. I want to know how much cash was generated from the business itself rather than taxes, property and equipment sales etc.

A lot of other income are one time occurrences which means that if you just take it for granted, you’ll be in for a surprise the following year.

Its a great blog you have here!

I checked the spreadsheet that you offer, and it looks very good. Before buying it, i just wanted to know how do you calculate FCF. I saw that you’re FCF is different from the FCF in morningstar (which is operating CF minus CapEx). what are you subtracting from this to get your FCF?

Thanks!
Ron

[...] The section starts off with why DCF valuation is unreliable, and then goes over a 3 step valuation technique to mitigate the risk of making too many predictions associated with discounted cash flow analysis. [...]

Just as an quick teaser, have you ever compared the premium spreadsheet model to that outlined in Hagsrtom’s book, The Warren Buffet Way, on page 126? Both models and up with different valuations by high margins.

All the best

Dave

[...] Discounted Cash Flow & Stock ValuationFinancial Statement Analysis: Statement of Cash Flows AeroGrow (AERO)Benjamin Graham Formula Free Investment SpreadsheetFree 10YR DCF Fair Value Investment SpreadsheetForbes 200 Best Small Companies ProjectFortune 40 Best Stocks to Retire on: Part 1Free 5YR DCF Fair Value Investment SpreadsheetAnalysis Now Includes Spider GraphsFortune 40 Best Stocks to Retire on:Part 2Forbes Best Small Companies Project: Part 3 [...]

[...] Statement Analysis: Statement of Cash Flows AeroGrow (AERO)Discounted Cash Flow & Stock ValuationBenjamin Graham Formula Free Investing SpreadsheetForbes 200 Best Small Companies ProjectFree Fair [...]