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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 / Transportation
Wednesday, October 15, 2008
Nissan to Recall 200,000 Cars
FOXBusiness
Nissan Motor Company announced a voluntary recall involving more than 200,000 cars on Wednesday. Beginning November 3, the vehicles will be recalled due to a possible faulty sensor impacting the vehicles’ passenger side airbag.
The company alerted U.S. National Highway Traffic Safety Administration that the recall will involve about 140,000, of the 2007 and 2008 model Nissan Altima, Altima Coupe, the Nissan 350Z, Murano and Rogue, and Infiniti G35 Sedan, G37 Coupe and EX35.
Nissan said it expects less than 1 percent of the vehicles will have a defect and said if necessary, the company will replace the hardware of the vehicles.
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