How do I establish the cash generated by a business from its published accounts?

T

tlalor

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Hello there,
I wanted to establish the free cash thrown off by a business in a 12 month period.
So I looked at the company's consolidated cash flow statement, there are figures attributed to 'Net cashflow from operating activities', 'Cash and cash equivalents at end of year'.
The former seems to be the figure I should focus on, but are there any practises that might misrepresent the figure or is there a foolproof method for deriving free cash from an annual report?
Thanks
t
 
Take the net cash generated from the operations which is separately identified (i.e. after working capital and other such items) and deduct any interest paid and any minority dividends paid and add back interest received - sometimes these three items are recoded below operational cashflows. Basically, you are looking for free cash flow generated before capital expenditure and acquisitions/disposals.

Rory Gillen
 
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