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This is correct - good explanation. It's also why good financial professionals/investors look at cash flow statement (follow the money) more so than the income
by mbesto 10y ago
This is correct - good explanation. It's also why good financial professionals/investors look at cash flow statement (follow the money) more so than the income statement.
- probe 10y agoGood thing Dropbox is free cash flow positive then! https://techcrunch.com/2016/06/14/dropbox-says-it-is-cash-flow-positive-in-no-rush-to-ipo/ https://techcrunch.com/2016/06/14/dropbox-says-it-is-cash-fl...
- acconsta 10y agoHow about when they were buying those DCs?
- dharmon 10y agoThe whole idea of depreciation is spreading large capital expenditures (free cash flow = cash flow from operations - cap. ex.) over many years. Therefore, free cash flow in any single year does not say much, only when considered over many years. The key question is, then, those large capital expenditures that are accounting for the large depreciation charges, were they truly one-off, or can we expect them to be recurring? Having said that, I have made mucho dinero off of investing in companies that have negative earnings due to high depreciation charges from truly one-off expenses (infrastructure investment, foolish purchases by previous management, etc.). Eventually the depreciation tapers off and earnings fall in line with fcf, and I make money.