25 October 2019
By Maynard Paton
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Studying free cash conversion is vital when evaluating a set of accounts.
The measure compares free cash flow to reported earnings, and can indicate whether a business is a ‘cash fountain’ or a ‘cash guzzler’.
Ideally we want to own companies that generate plenty of spare cash, because such cash can:
- Underpin accounting profits;
- Indicate an attractive business, and;
- Fund welcome dividends.
By employing SharePad, I identified Rightmove as an elite cash producer.