more data

Tom Lehman uswa12 at lorainccc.edu
Wed Mar 17 06:54:27 PST 1999


Dear Doug and Roger,

On a hunch and strctly being intuitive, it sounds like Doug is saying the market is about 70% to 80% out of touch with reality were as Roger and Jordan are saying it is only 30% to 40% out of wack.

Only a major in economics at an unknown school,

your email pal,

Tom L.

Doug Henwood wrote:


> Roger Odisio wrote:
>
> >Small question, Doug. Isn't "free cash flow" profits plus depreciation
> >minus capital expenditures, since cash flow is profits+depreciation?
> >Depreciation is merely a book calculation and capital expenditures come out
> >of cash flow, not just profits. Some part of the capital expenditures may
> >be replacement and some may be capacity expansion. Don't mean to be picky
> >if you were just using shorthand.
>
> You're right; I was just using shorthand. The Fed's flow of funds defines
> internal funds as after-tax profits plus depreciation allowances, and the
> "financing gap" as the difference between internal funds and capital
> expenditures. Free cash flow is the financing gap with the sign reversed.
>
> >Any idea about the number or proportion of companies buying back stock
> >without the free cash flow?
>
> Nope. I'm just working with the flow of funds numbers for the entire
> nonfinancial corporate sector. If someone out there has the Compustat tapes
> and wants to run some disaggregated numbers, please let me know!
>
> Doug



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