Sunil Shah

Microsoft: Free Cash Flow Analysis

Thanks for response Peter. But the answer to your question: "The question I ask every company I analyze is "how much return (in percent) in FCF are you going to give me for every dollar of total capital you invest?"

...would be seriously distorted for a company with significant cash on bal sht- particularly when two yrs ago it earned 4% and now close to 0... and these nos obviously reduce the FROIC.

Pl oh pls use this methodology for msft, and lets see what the real P/FCF is. It should be a relatively simple adjustment to your work.

thank you!

Microsoft: Free Cash Flow Analysis

nice work Peter!. but doesn't msft have net cash per share. do you subtract this from invested capital (ie enterprise capital). then you should do the calc above(strictly speaking, less interest earned on cash) to get FROIC and just subtract the cash per share as per bal sht from share price to compare valuations over time. Right? Your opinion would be appreciated. And your work again using this methodology!!