Net Cash Flow 345the same time, some revenues may not be collected in cash during the year, and these
items must be subtracted from net income when calculating net cash flow.
Typically ,depreciation and amortization are by far the largest noncash items ,
and in many cases the other noncash items roughly net out to zero. For this reason ,many
analysts assume that net cash flow equals net income plus depreciation and amortization:. (9-2)
To keep things simple, we will generally assume that Equation 9-2 holds. However, you
should remember that Equation 9-2 will not accurately reflect net cash flow in those in-
stances where there are significant noncash items beyond depreciation and amortization.
We can illustrate Equation 9-2 with 2002 data for MicroDrive taken from Table 9-2:
Net cash flow$113.5$100.0$213.5 million.Net cash flowNet incomeDepreciation and amortizationFinancial Analysis on the Internet
A wide range of valuable financial information is available on
the Internet. With just a couple of clicks, an investor can
easily find the key financial statements for most publicly
traded companies.
Say, for example, you are thinking about buying Disney
stock, and you are looking for financial information regarding
the company’s recent performance. Here’s a partial (but by no
means a complete) list of places you can go to get started:
One source is Yahoo’s finance web site, http://finance.
yahoo.com.aHere you will find updated market informa-
tion along with links to a variety of interesting research
sites. Enter a stock’s ticker symbol, click on Get Quotes,
and you will see the stock’s current price, along with recent
news about the company. Click on Profile (under More
Info) and you will find a report on the company’s key finan-
cial ratios. Links to the company’s income statement, bal-
ance sheet, and statement of cash flows can also be found.
The Yahoo site also has a list of insider transactions, so you
can tell if a company’s CEO and other key insiders are buy-
ing or selling their company’s stock. In addition, there is a
message board where investors share opinions about the
company, and there is a link to the company’s filings with
the Securities and Exchange Commission (SEC). Note
that, in most cases, a more complete list of the SEC filings
can be found at http://www.sec.gov,or http://www.
edgar-online.com or http://www.edgarscan.com.
Other sources for up-to-date market information are
http://www.thomsonfn.com, http://money.cnn.com,
http://www.bloomberg.com, and http://www.cbs.
marketwatch.com.Each also has an area where you can
obtain stock quotes along with company financials, links
to Wall Street research, and links to SEC filings.
Another good source is http://www.quicken.com.En-
ter the ticker symbol in the area labeled quotes and re-
search. The site will take you to an area where you can
find a link to the company’s financial statements, along
with analysts’ earnings estimates and SEC filings. This
site also has a section where you can estimate the stock’s
intrinsic value. (In Chapter 5 we discuss various methods
for calculating intrinsic value.)
If you are looking for charts of key accounting variables
(for example, sales, inventory, depreciation and amortiza-
tion, and reported earnings), along with the financial
statements, take a look at http://www.smartmoney.com.
Another good place to look is http://www.
marketguide.com.Here you find links to analysts’ re-
search reports along with the key financial statements.
Two other places to consider: http://www.hoovers.com
and http://www.zacks.com. Each has free research
available along with more detailed information provided
to subscribers.
Once you have accumulated all of this information, you
may be looking for sites that provide opinions regarding the
direction of the overall market and views regarding individ-
ual stocks. Two popular sites in this category are The Motley
Fool’s web site, http://www.fool.com,and the web site for
The Street.com, http://www.thestreet.com.
Keep in mind that this list is just a small subset of the in-
formation available online. You should also realize that a lot
of these sites change their content over time, and new and
interesting sites are always being added to the Internet.
aA quick way to change an address is to highlight the portion of the address
that is different and type in the appropriate letters of the new address. Once
you’re finished just press Enter.