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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.
Home / Markets / Industries / Finance
Thursday, July 10, 2008
Bankrate: Mortgage Rates Fall Two Weeks in a Row
Comtex
NEW YORK, July 10, 2008 /PRNewswire-FirstCall via COMTEX/ ----Mortgage rates moved lower once again, with the average conforming 30-year fixed mortgage rate falling to 6.48 percent. According to Bankrate.com's weekly national survey of large lenders, the average 30-year fixed mortgage has an average of 0.37 discount and origination points.
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The average 15-year fixed rate mortgage popular for refinancing declined to 6.01 percent, while the average jumbo 30-year fixed rate stepped back to 7.64 percent. Adjustable mortgage rates followed suit, with the average 1-year ARM sinking to 6.17 percent and the average 5/1 ARM dropping to 6.05 percent.
Continued worries about the economy and the health of the financial system have investors craving bonds. Mortgage rates are closely related to yields on long-term government bonds. As investors have fled a volatile stock market, much of the money has ended up in fixed income investments such as Treasury securities and mortgage bonds. This brings mortgage rates down, though not enough to match the decline in Treasury yields in recent weeks. The wider spread between mortgage bonds and risk-free Treasury yields represents the ongoing concerns about credit quality and strains in many corners of the debt markets.
Mortgage rates have been on a wild ride since the beginning of the year. The average 30-year fixed mortgage rate was as low as 5.57 percent in January, meaning that a $200,000 loan would have carried a monthly payment of $1,144.38. But at today's rate of 6.48 percent, a $200,000 loan would mean a monthly payment of $1,261.51.
SURVEY RESULTS 30-year fixed: 6.48% -- down from 6.53% last week (avg. points: 0.37) 15-year fixed: 6.01% -- down from 6.09% last week (avg. points: 0.41) 5/1 ARM: 6.05% -- down from 6.09% last week (avg. points: 0.34)
Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.
For a full analysis of this week's move in mortgage rates, go to http://www.bankrate.com/mortgagerates
The survey is complemented by Bankrate's weekly forward-looking Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. This week, 46 percent predict rates to decline further, while 31 percent expect mortgage rates to rebound and move higher. Just 23 percent forecast that mortgage rates will remain more or less unchanged over the next 30 to 45 days.
For the full mortgage Rate Trend Index, go to http://www.bankrate.com/RTI
About Bankrate, Inc. (Nasdaq: RATE)
The Bankrate network of companies includes Bankrate.com, Interest.com, Mortgage-calc.com, Nationwide Card Services, Savingforcollege.com, Fee Disclosure and InsureMe. Each of these businesses helps consumers to make informed decisions about their personal finance matters. The company's flagship brand, Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes, debt management and college finance. Bankrate.com is the leading aggregator of rates and other information on more than 300 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans and online banking fees. Bankrate.com reviews more than 4,800 financial institutions in 575 markets in 50 states. In 2007, Bankrate.com had nearly 60 million unique visitors. Bankrate.com provides financial applications and information to a network of more than 75 partners, including Yahoo! (Nasdaq: YHOO), America Online (NYSE: TWX), The Wall Street Journal and The New York Times (NYSE: NYT). Bankrate.com's information is also distributed through more than 500 newspapers.
For more information contact: Kayleen Keneally Senior Director, Corporate Communications kkeneally@bankrate.com 917-368-867
SOURCE Bankrate, Inc.
http://www.bankrate.com
Copyright (C) 2008 PR Newswire. All rights reserved
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