AWK - Analyzing The Powershares S&P Global Water Index Portfolio
Free Cash Flow does not lie
The reason we use free cash flow (FCF) as the basis for much of our analysis is that it is difficult to manipulate, unlike earnings per share. When a company does not generate any free cash flow our algorithm automatically assigns a Main Street Price (estimated current value) of zero. We do not gamble on companies that burn through cash without the ability to generate enough free cash flow to maintain operations without borrowing or diluting shareholders through stock issuance. There is nothing wrong with doing so,