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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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Friday, May 23, 2008
Toray Industries to Pay U.S. for Price Fixing on Carbon Fiber Materials
Comtex
WASHINGTON, May 23, 2008 /PRNewswire-USNewswire via COMTEX/ ----Toray Industries Inc., a Japanese company, and its U.S. subsidiary, Toray Composites (America) Inc., have agreed to pay the United States $15.25 million to settle a lawsuit alleging that they conspired to fix prices on carbon fiber, a graphite substance used in aircraft, ammunition and satellites procured by the United States, the Justice Department announced today.
A lawsuit, filed against the companies, alleged that, beginning at least as early as 1993 and continuing at least until 2001, Toray and its co-conspirators agreed on prices that would be charged for carbon fiber that was ultimately used in products procured by the U.S. government from other companies. Carbon fiber composites are valuable because they are lightweight yet strong.
"Today's settlement should send a message to those who deal with the government, both directly and indirectly, that prices charged for products sold to the United States must be competitive," said Gregory G. Katsas, acting Assistant Attorney General of the Justice Department's Civil Division.
The lawsuit was originally filed on behalf of the United States by Randall Beck, Gary Beck, Tod Boretto and Kevin McLean, who, through their employer Horizon Sports Technologies Inc., had dealings with the co-conspirators. Their lawsuit was filed under the qui tam provisions of the False Claims Act, which permits private citizens, known as "relators," to sue on behalf of the government to recover federal funds that were obtained by false or fraudulent claims, and to receive a share of any settlement or judgment. As a result of today's settlement, the relators will receive $4 million from the settlement with Toray.
This is the fifth and final settlement in this matter. The total recovery, including the current settlement, is $61.75 million.
SOURCE U.S. Department of Justice
http://www.USDOJ.gov
Copyright (C) 2008 PR Newswire. All rights reserved
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