Dhiraj
If OCF is low, how can FCF be higher unless the company is selling non core assets and releasing cash. Free cash flow is the complete surplus available to shareholders after paying financial obligations/investments.
It does matter if you have to spend on capex or on WC, money blocked has no colour. Even EPC companies have no fixed assets but their cash gets locked up in WC,
I only highlighted an issue that’s confirmed by my scuttle butt too. I did not understand why this company could not generate cash until my contact helped me understand that they are investing more and more into inventory/WC in search of future growth. If they can break that cycle/squeeze it down, this can generate prodigious cash flows.
Good to discuss with you – we learn from each other.
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