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, July 29, 2008

Six Tips For Saving on Back-to-School Electronics

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Jennifer Waters

MarketWatch

CHICAGO -- Tight budgets or not, college students will spend more money on electronics in their back-to-school purchases this year than on apparel and apartment furnishings, underscoring the lofty place PCs, iPhones and other gadgets have taken on students' must-have lists.

Parents of high school, junior high and elementary school students will continue to spend more on apparel than electronics, but they will be upping their total payout for the gadgets by a far greater percentage than they will for new clothes.

And even then, electronics purchases overall are expected to take a beating along with every other back-to-school category amid an economic downturn that looks like it will spoil the second-most important "holiday" shopping season of the year.

"This is going to be a very, very weak computer back-to-school season," said Britt Beamer, president of America's Research Group. "More and more people who buy computers are watching for the deals and buying less expensive computers everyday."

"If you have to have a computer today you buy what you have to have versus what you'd like to have," he added.

The National Retail Federation, in conjunction with consumer tracking firm BIGresearch, projects that electronics spending will reach $5.1 billion overall in back-to-school spending for students in high school or younger. On average, parents said they will spend about $152 on computers and cell phones, up almost 18% from last year.

College students, on the other hand, said they will pay out about $212 on electronics, about an18% drop from last year. In all, college students are expected to spend $11.05 billion on electronics.

"Though every college student wants the latest-and-greatest gadgets, students are being frugal this year," said Phil Rist, vice president of strategy at BIGresearch. "While some may opt for a cheaper model, many students may take advantage of computer labs at school or a family computer at home instead of investing in one themselves."

College students spend more than others on back-to-school electronics, of course, given the requirements of most universities these days. But spending patterns tend to shift year to year, Rist said, because computers and cell phones are not upgraded or replaced on an annual basis. Consumers will pump up sales when a new product comes on the market, like last year's iPhone, which contributed to college students spending an average of $258 on electronics.

Here are six tips for finding good deals on electronics:

Shop sales. This is a hot promotional season for electronics sellers and more steamy this year given the tight budgets of many consumers.

Comparison shop. Get online and compare which stores are offering what bells and whistles on certain models. Do the same with cell phones and service providers.

Use the Internet. Craigslist and eBay are among the sites to search for used, reconditioned and even new electronics. Many electronics retailers offer special deals only online. And there's no shortage of shopping sites that can point you directly to the brand and price range you want.

Don't overbuy. Know what you need and stick to it. Other programs and accessories can be added later.

Haggle. Don't be afraid to ask sales associates for a deal. Many are authorized to give discounts on the floor.

Time the purchase. Many retailers are more willing to give special deals at the end of the month, when sales may be coming up short, than they are at the top of the month when there's still hope of making sales targets.