See
There are 2 things
1…Cfo should match PAT of last 10 yrs
This will give us idea that cash is not stuck in receivables, inventory etc
2…Free cash flow
=When you invest in growth companies,fcf (CFO-Capex) will be negative in most yrs
=When companies have good cash,they have following options
A…Dividend
B…Buy back
C…Acqusition
D…Cash on balance sheet
E…Invest in Capex for future growth
When companies dont find growth option,it is better to give dividend or buyback
However,when ROE>15,and companies find better growth opportunity ,then better to invest in its own growth story(capex).This will give negative fcf
…
On the contra view, one dark side of consistent negative fcf is
=If company manipulates operating expense into capital expense, then profit will inflate and fcf will be negative
=So there should be genuine expansion
And one suggestion
See “fixed asset purchased” in cash flow rather than cash flow from investment for fcf
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