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💰Free Cash Flow: Back to the Basics

Published 25 days ago • 1 min read

Hey Reader,
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Did you know the cash flow statement didn't become a requirement until 1987? Before 1987, Companies were not required to prepare one. Instead, they often included a "funds flow statement" or "statement of changes in financial position," which focused on working capital changes rather than actual cash movements.

In today's issue:

  • Aswath Damodaran takes us back to the basics of free cash flow
  • Brian Feroldi breaks down the cash flow statement, the base for all free cash flow calculations
  • Great article from Michael Mauboussin explaining how we can reorder the cash flow statement for better clarity
  • Thread on calculating free cash flow to the firm

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💎NUGGETS

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My Favorite Finds

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Professor Aswath Damodaran takes us back to the basics of free cash flow​

Brian Feroldi breaks down the cash flow statement basics.

Breaking down the components of free cash flow and how to find the ingredients.

Michael Mauboussin's breakdown of the cash flow statement and how to read it for clarity

A quick explainer of the difference between net income and free cash flow

​Jeff Bezos 2004 Amazon's letter illustrates his thoughts on free cash flow; must read if you haven't already.

🔍Question of the Week

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📖Knowledge Tidbits

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Thanks,
Dave Ahern
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