Yearning to be free cash flow: Deep Quarry on the SEC's FCF comment letters

Used to be you could get away with being a net income loser if you at least had positive "free cash flow". But the FCF metric has always been easily manipulated.

May 20, 2024

∙ Paid

My friend and frequent collaborator Olga Usvyatsky wrote today about SEC comment letters on companies' use and abuse of the "free cash flow” or FCF metric.

Deep Quarry

SEC comments on Free Cash Flow metrics - which adjustments are prohibited?

Free Cash Flow (FCF)—a non-GAAP metric typically defined as cash from operations less capital expenditures (CAPEX)—is one of the key financial metrics used by investors and analysts to gauge a company's financial health. It indicates the amount of cash available for distribution to shareholders, debt repayment, or reinvestment in the business…

a year ago · Olga Usvyatsky

Olga writes that the most common references the SEC makes in its comment letters is to its guidance provided by Questions 102.05 and 102.07, last updated in 2016, and Item 10(e) of Regulation S-K, whi…

The Dig

Yearning to be free cash flow: Deep Quarry on the SEC's FCF comment letters

Used to be you could get away with being a net income loser if you at least had positive "free cash flow". But the FCF metric has always been easily manipulated.

This post is for paid subscribers