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Preview of Free Cash Flow and Investor Return

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Course Description

This is a free preview (7 minutes) of the Free Cash Flow and Investor Return course. The description of the full course (65 minutes) is provided below.

This course enables investors as well as employees, managers and directors of public companies:

(1) to understand the advantages of using free cash flow as compared to net income in analyzing a company's financial performance

(2) to build the instructor's unique free cash flow version of the GAAP income statement and 

(3) to understand how management's allocation of free cash flow affects investor return. The instructor's unique investor return model is introduced. 

Students should already be familiar with the GAAP income statement, balance sheet and statement of cash flows.


After taking this course, you will be able to:

  • Understand the advantages of using free cash flow in analyzing a company's financial performance.
  • Learn how to calculate a company's free cash flow in both the conventional format and in the instructor's unique Free Cash Flow Statement format.
  • See all of the sources of investor return come together in one comprehensive yet simple model.

This course is for those within the following business functions:

  • Public company managers and employees who want to strengthen their understanding of their company’s financial performance.
  • Customers and vendors of public companies who need to understand the cash flows of their important corporate relationships
  • Private company managers and owners who want to maximize their company's financial performance and valuation
  • Professional investors who want an alternative to the discounted cash flow model and PE ratio
  • Individual investors who want an investor return model that is comprehensive yet does not require use of technical calculations and long-term assumptions

    1. Introduction - 5 Minutes

      1. Title Page
      2. Instructors Background
      3. Course Objectives
      4. Quizzes
      5. Lesson 1 Pre-Quiz
    2. Lesson 1: GAAP - 12 Minutes

      1. Lesson 1: GAAP
      2. From Cash Books to GAAP
      3. Accrual Accounting Example
      4. GAAP's Limitations
      5. Return on Equity
      6. Lesson 1 Post-Quiz
      7. Lesson 2 Pre-Quiz
    3.  Lesson 2: Wall Street's Free Cash Flow - 8 Minutes

      1. Lesson 2: Wall Street's Free Cash Flow
      2. Wall Street's Free Cash Flow
      3. McDonald's Corporation
      4. Wall Street's Free Cash Flow: Can't We Do Better?
      5. Lesson 2: Post-Quiz
    4.   Lesson 3: Building the Free Cash Flow Statement - 8 Minutes

      1. Building the Free Cash Flow Statement
      2. Revenues
      3. Remove Working Capital Items
      4. Operating Cash Flow
      5. Operating Cash Costs
      6. FCF Statement II
      7. FCF Statement III
      8. The Free Cash Flow Statement
      9. Lesson 3 Post-Quiz
      10. Lesson 4 Pre-Quiz
    5.  Lesson 4: Investor Return - 18 Minutes

      1. Lesson 4: Investor Return
      2. Free Cash Flow Deployment
      3. Investor Return - Uncertainties
      4. Acquisitions
      5. Debt and Price
      6. Debt
      7. Buybacks / New Shares Issued
      8. Dividends
      9. Investor Return from Operations
      10. Investor Return
      11. Lesson 4 Post-Quiz
      12. Lesson 5 Pre-Quiz
    6. Lesson 5: Free Cash Flow and Financial Analysis - 9 Minutes

      1. Lesson 5: Free Cash Flow and Financial Analysis
      2. Free Cash Flow Margin
      3. Operating Cash Flow Margin
      4. Capex Ratios
      5. Netting Charges and Credits
      6. De-GAAPing Net income
      7. FCF Debt Service Ratio
      8. FCF Dividend Payout Ratio
      9. Lesson 5 Post-Quiz
    7. Further Steps - 5 Minutes

      1. Further Steps

    About the Expert

    George C. Christy, CFA

    George C. Christy, CFA

    George C. Christy has written two books about free cash flow: Free Cash Flow: Seeing Through the Accounting Fog Machine to Find Great Stocks (John Wiley & Sons) and Free Cash Flow: A Two-Hour Primer for Management and the Board (Booklocker). He was a corporate banker, investor relations consultant and treasurer of a NASDAQ telecommunications equipment manufacturer. He holds the Chartered Financial Analyst (CFA) designation. He has contributed to The Economist, The Financial Times, Financial Week and Investment News.
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