BK - Analysis Of Berkshire Hathaway Holdings Q4 2018
Focusing on Free Cash Flow
Earnings can be manipulated but cash is cash. And the most important cash is the free cash flow. That is what is left over after a company has invested what it needs back into the business to maintain the business. It is akin to Warren Buffett’s “owners’ earnings” that he referred to in Berkshire Hathaway's ( BRK.A) ( BRK.B) 1986 letter to shareholders. When valuing a company, we like to use the future cash that will be available to shareholders over the long term.
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