Letters by Topic

Letters on Free Cash Flow

The cash a business generates after maintaining its assets — the truest measure of what an owner can take out.

1986·Defining owner earnings in the 1986 letter — the cash truly available to owners

These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges... less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume.

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Free Cash Flow is one of the ideas behind the ValueOS tools. See it applied to real companies.

📖 Concept 🎯 ValueOS Score