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Free cash flow

Surprisingly, this is one of the most most indicators I will be looking into. Perhaps more importantly on CFO or cash flow from operations which you can find from the income statement.

CFO is the lifeblood of the company. Whether it can sustain itself over the long run. Thanks that this article actually pointed out something I did not realized.

The most important factor is to look over the 5 years time frame. Because I dun really believe company can achieve much just by cost cutting over such a long period. If its a bad company, it will still be a bad company. Or what Warren will point out Durability of the company.

From SmartMoney

The headlines may be about earnings, but the smart money always pays closer attention to free cash flow.

Right now that can be a tricky metric because the less companies spend, the better free cash flow looks. And over the past year, cost cutting has been a way of life in corporate America.

Considering that companies can only cut so much, especially as the second quarter winds down, the trick in the next round of earnings will be to figure out whether this robust free cash flow is sustainable.

Free cash flow, generally defined as operating cash flow minus cap spending, is the holy grail of any company because it is cash that comes with no strings attached.

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