Euro sails through

michael michael at ecst.csuchico.edu
Tue May 5 18:03:53 PDT 1998


Thank you very much. It is just a paper for a conference. I am working on a very different project about economic stability.

Did E.P. Smith anticipate anything in the paper other than the definitions of value/wealth?

John M. Legge wrote:


> Doug Henwood wrote:
>
> >
> >I say there, and I'll say again, that Jensen is really onto something in
> >his argument about free cash flow - that mature corporations throw off more
> >cash than they can reinvest at a "satisfactory" rate of profit.
> >
>
> I don't think that Jensen has "discovered" anything (but if you give
> reference with date I can be sure). Simple statics prove the point: during
> investment phase cash flow is negative as plant is constructed, equipment
> bought, products designed and market established. Once firm/industry
> matures then cash flow turns positive.
>
> a) if there was no prospect of positive cash flow after investment phase
> was complete, then investment would not have been made in first place
> b) funds for investment can only come out of cash surplus generated by
> mature companies
>
> Too much concentration of long run equilibrium clearly rots the mind.
>
> JML

-- Michael Perelman Economics Department California State University Chico, CA 95929

Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu



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