Another way to look at the end of the video: At 5.3% F.C.F.-yield, it would take ~18.87 years (i.e., 1 / 0.053) (ignoring inflation, dividends, and other factors) to earn back, as cash-returns, the amount of money you spent on the company.
Sir , I love your lessons...you are teaching the topics very well...these are the basics but i am also beginner on these subjects...I keep following you and putting likes...I wish the best for you...cheers man!
Actually, Americans do not refer to depreciation as amortization. Depreciation refers to TANGIBLES. While, amortization refers to INTANGIBLES. You're welcome!
Thank you, I stumbled across this video by the function of RU-vid algorithm and decided to view it, it is one of the best choices I've made today as it has introduced me to terms that are new to me (FCF & FCF yield), and ways to solidly the perception of whether a business is genuinely a good investment or not. You've got yourself a subscriber today.
It's better to have cash than an equal amount of receivables, but still, receivables are assets. It depends upon the quality of the debtor. A debtor can be dodgy or he can be honest and financially healthy. Still, it is legitimate to consider accounts receivable as assets under accrual-based accounting.
My God. Thank you for these videos. Valuation is so interesting. When you learn this material with no formal education from various sources there is no core "message". So you hear a lot of terms from different forums and you find it hard to attribute a meaning to ratios. "What is the WHOLE story these numbers are telling me?" I get what they represent but as a person outside the field I have no insight into why experienced players value these ratios. You give a great insight into WHY a ratio matters, and what it MEANS to people reading it off. Great teachings here.
Many thanks Tim. Great video! I have looked at a number of your videos now and each time I learn a little more. I have read books on the subject but few tell you what to actually look for AND what it tells you about the condition of the business. Malcolm
This is a great video on FCF and one of the few that covers FCF Yield. Glad I found it, but both of those terms are missing from the title or description which may make it harder for others to find...
Outstanding! As a mutual fund value investor I am investing in firms that have a relatively low Price/Book Value per share ratio. I assume that these same firms would also have a relatively low Price/Free Cash Flow per share ratio. This would make me feel good about value investing.
awe hell ! this guy is legit! you don't want to miss this guy he letting you know what the real deal is before you get yourself hyped up and invested into some stock to your research don't go in half cocked!
Sir. Pls give a sample with a set financial statement like P/L, BS, Cash Flow, The change of Capital/RE, a note of FS, a number of outstanding shares with numbers. So we can understand what are you talking about.
I am struggling somewhat to exactly determine the FCF. I am looking at the 2020 Euronav financial report and it shows 3 main categories: net cash flow from operating, financial and investment activities. Adding these up gives a negative figure of approx 147M€ (and reported total profit of approx 470M for the year). But the (147M€) figure also includes 352 M€ of paid dividends... should I take this out in order to determine FCF? And if yes, probably there are other things also to take out? sorry for the newbie question....
Fcf yeild is a grt concept but the problem is now a day's most of the IT companies acquiring technology through M&A without disturbing their fcf yeild and report high fcf
This is a terrific video, as are most of Tim Bennett's on finance (though, his Moneyweek segments I find to be markedly superior to his more recent, on Killik and Co.). This said, Bennett's comment on "amortization"'s being the American version of Britain's "depreciation" confused me for a long while after I watched this film initially: Both concepts of depreciation and of amortization are present in U.S. nomenclature - the former refers to tangible assets, whilst the latter to intangible.
Nowhere I can find that exact formula, and it's quite confusing because in every of them, the result is different. :c I'll use Tim's formula, because it is the one that makes more sense.
Absolutely brilliant. Especially the free cash flow as a tool to asses the safety of a dividend payment. I think with cyclical stocks like oil this would be great. I’m going to use this to do a worst case scenario test and see how comfortably shell can pay the dividend.
free cash flow is measuring the change from one statement to the next in the cash available for any purpose, cash and cash equivalents is on the balance sheet and is the total cash (or other equally liquid form) at the balance sheet date.
Great presentation. Makes me actually fully understand the topic. I just wonder when Tim said that 5% of free cash flow yield is solid but doesnt scream a bargain. How much % would be a bargain? On a funny note his accent reminds me of Jimmy Carr.
Thank you so much for posting this insightful video. I am a mature (age 35) BSc Accounting and Finance International (Black American) student at a UK University. Your explanation is great, helping me understand much more. Also I am preparing to do investing.
