I discuss how one should read a cash flow statement, a statement that contains some mind-twisting adjustments.
I then discuss the meaning and significance of two derived metrics, Free Cash Flow (FCF) and Owner’s Earnings as Buffett defines it.
Detailed discussion on financial statements can be found in Benjamin Graham’s The Interpretation of Financial Statements https://amzn.to/2M5Js9Q, it is very terse but highly useful. Mostly on manufacturing companies.
Further reading on financial shenanigans, John Del Vecchio’s What’s behind the numbers https://amzn.to/2vkMkpM
This series is largely based on Pat Dorsey’s Five Rules for Successful Stock Investing, https://amzn.to/2v8rIBg and Benjamin Graham’s The Intelligent Investor, https://amzn.to/2n5vfMg
Accompanying slides: https://docs.google.com/presentation/d/1qWH1iyj_v-zlfc2evDzTHpX6E_4vK5xfXx6bbB1lFuY/edit?usp=sharing
Basic Investing series – Accounting – Cash flow