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Free Cash Flow and Present Value of Future Cash Flow Questions

  1. 07-23-2017, 06:22 PM #1
    jim0000
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    Free Cash Flow and Present Value of Future Cash Flow Questions

    Hello. I have another question on my readings from the Dhandho Investor by Pabrai. He analyzed Bed Bath and Beyond's stock. My only question is how he got the number 523 for Free Cash Flow

    Information (For 2005)
    Quoted Stock Price = $36 per share
    Market Cap = $10,700,000,000

    Capital Expenditures = $191,000,000
    Depreciation = $99,000,000
    Net Free Cash Flow = $413,000,000

    Revenue Growth = 15% to 20%
    Net Income Growth= 25% to 30%

    Growth for Free Cash Flow = 30% for first 3 years, then 15% a year for three years, 10% a year thereafter

    Excess Cash = $850,000,000
    ---------------------------------

    Please see the excel doc for the chart



    Best regards,

    James
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    Last edited by jim0000; 07-23-2017 at 09:03 PM.
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  2. 07-23-2017, 08:43 PM #2
    jim0000
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    Re: Free Cash Flow and Present Value of Future Cash Flow Questions

    sorry double post
    Last edited by jim0000; 07-23-2017 at 09:04 PM.
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  3. 07-23-2017, 09:02 PM #3
    jim0000
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    Re: Free Cash Flow and Present Value of Future Cash Flow Questions

    I have figured out both Free Cash Flow and Present Value of Future Cash Flow. The only thing I'm needing right now is how he got a Free Cash Flow of $523 for year 2006.
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  4. 07-23-2017, 10:36 PM #4
    joeu2004
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    Re: Free Cash Flow and Present Value of Future Cash Flow Questions

    Quote Originally Posted by jim0000 View Post
    I have figured out both Free Cash Flow and Present Value of Future Cash Flow.
    The only thing I'm needing right now is how he got a Free Cash Flow of $523 for year 2006.
    Okay. That saves me a lot of trouble explaining.

    As for the $523, I figure that $413 in B10 is a typo. It should be $403. Then $523 is 403*(1+30%). (Really rounds to $524.) The 30% is the growth rate for the first 3 years, described in B15.
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  5. 07-23-2017, 11:21 PM #5
    jim0000
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    Re: Free Cash Flow and Present Value of Future Cash Flow Questions

    Quote Originally Posted by joeu2004 View Post
    Okay. That saves me a lot of trouble explaining.

    As for the $523, I figure that $413 in B10 is a typo. It should be $403. Then $523 is 403*(1+30%). (Really rounds to $524.) The 30% is the growth rate for the first 3 years, described in B15.
    Joe, assuming that's your name, are the best. My dad's name is Joe too. I appreciate the help.
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