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Just as your pulse is checked during a routine physical, free cash flow is used as an indicator of a company's health. It equals the cash brought in from operations minus the money needed to pay the bills. Think about leftover money in your checking account after you pay this month's bills.
Investors and analysts see this leftover money as a gauge of a company's ability to perform. It is available for transactions such as handing out dividends and working on new products.
Some argue free cash flow is wrongly overshadowed by the emphasis often placed on earnings. Earnings numbers can be manipulated and don't always tell the whole story -- and earnings don't mean much if there's nothing left over after a company pays its expenses. Even if you bring in a six-figure salary, but no money left after paying the bills, are you in great financial shape?
You don't have to be Einstein to figure out free cash flow. To calculate the number, subtract the company's expenditures and dividends from its operating cash flow.
If the free cash flow is written in red ink, it doesn't necessarily signal curtains. This is common for young companies looking to grow. It also could be a result of heavy investments, which in the long run could be worth a standing ovation.
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Tuesday, May 20, 2008
Aktiv Kapital ASA is hosting a Capital Markets Day today, May 20th 2008.
Comtex
May 20, 2008 (Hugin via COMTEX) ----The program will provide insight into the present and future business of Aktiv Kapital.
Aktiv Kapital is creating Europe's largest non performing debt data warehouse, that enables pioneering scoring and valuation methods. Aktiv Kapital expects the new scoring system to secure a more efficient and focused customer approach, increasing collection and reducing costs going forward.
Based on the assumptions presented in the Capital Markets Day, Aktiv Kapital expects:
* High single digit EBITDA growth * Long term target debt/equity ratio > 2/1 * 15% return on portfolio investments * One new geographic market every year * Long term target of dividend of minimum 30% of profit after tax
All presentations are enclosed and will be available on www.aktivkapital.com
For further information, please contact:
CEO Erik Oyno Tel: +47 22 91 59 55 / +47 90 13 12 03 erik.oyno@aktivkapital.com
SOURCE: Aktiv Kapital
Copyright (c) 2008, HUGIN AS. All rights reserved.
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