RE:RE:RE:RE:RE:RE:Top Pick on Market Call Today :>)As you mentioned, a company can do whatever it wants with a non-GAAP measure, and many use this latitude to cast FCF (or the closely related DCF and CAFD) as positively as possible.
The lines of interpretation (and manipulation) are mainly drawn within CFFI: (1) What investments were necessary to sustain operations? (2) What investments were not necessary, but were treated as so important that they justified debt or dilution? Should we permit (2) to be ignored in the FCF calculation?
It's difficult for outsiders to see deeply enough into a company to determine the degree of necessity of some investments. As time has passed, I have come to appreciate that the black-and-white accounting rule (FCF=CFFO-CFFI) is best used because a company has often already answered the question: it decided that the money spent in CFFI was important enough to justify debt or dilution.
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jleer42 wrote: FCF isn't definded by GAAP or IFRS, so it is open to interpretation. Generally it is considered the discretionary cash a company has to pay dividends, purchase shares, retire debt, make aquistions, increase capacity, or add to its liquidity.
You have a different definition, which is fair, but generally people here are discussing the cash flow as the pot of money left over after operations from which dividends and share buy backs could come from.