Hctor Medina, Cemex executive vice president of planning and finance, says Cemex's ratio of debt to cash flow (earnings before interest, taxes, depreciation and amortization) currently stands at 3.55 and should soon fall to 3.0.
Its valuation of six times debt-adjusted cash flow is a 20% discount to the sector.
By comparison, TotalFinaElf trades at 8.6 times debt-adjusted cash flow and Exxon trades at 12, based on yesterday's closing prices.
Although Moody's has had a positive outlook on JBS since 2009, the company's debt-constrained cash flow has kept its rating at B1.
In order for me to consider a company fiscally fit it has to have little or no debt, and strong cash flow generation.
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Selling for a ratio of six times enterprise value (market cap plus long-term debt) to EBITDA cash flow (earnings before interest, taxes, depreciation and amortization), Cemex looks cheap.
Trends in cash flow, debt reduction, and earnings power are all important to the mix.
Coke has plenty of cash flow for debt service but Apple boasts the far superior balance sheet.
To compile a dividend stock buy list, you need to be knowledgeable in cash flow and debt metrics because it is the sustainability of high dividends that make certain stocks attractive.
These, Gale figured, would provide cash flow to service debt on the park buildings.
With financing costs down, however, rising debt multiples have not sliced cash-flow coverage for new LBOs.
In fact, cash flow increased, debt decreased and the company reiterated the results were short term in nature.
Foster recommends focusing on firms with net debt of less than two times cash flow as measured by Ebitda.
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The message is upbeat, with Judson floating the idea of taking the company private, while batting away concerns over shrinking cash flow to service debt.
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High dividend tax rates will cause tax conscious boards not to make that choice, opting instead for other uses of free cash flow such as debt-fueled stock buybacks and acquisitions.
Neither investors like companies with a lot of debt and both want to see healthy cash flow.
Beyond high net cash levels, firms making the First Cut have positive earnings and operating cash flow, as well debt levels below the norm for their industry.
For private equity investors, the final test is whether a venture will generate sufficient cash flow to service the debt they plan to pile on it in order to pay themselves big dividends and recoup their initial investment--to "get their bait back, " in Wall Street parlance.
In a statement Tuesday, HP said it intends to court Dell customers who are worried about the company's ability to innovate, expand its product line and pay its bills now that it will have to earmark some of cash flow to reduce the debt taken on to go private.
And she says that strong cash flow generation points to further debt reduction and a reduced interest payment burden in 2012 and beyond.
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The question investors have to ask themselves is, will CenturyTel be able to generate enough cash flow to service its ballooning debt load?
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While it has achieved scale, much depends on how quickly it's able to turn around its Brazilian assets and generate cash flow to pay back its debt.
"We need to consolidate our holdings and work on our cash flow to bring down the debt, " says Frederico, the youngest sibling, sitting in the Gerdau boardroom.
Russell Croft, managers of the Croft Value and Croft Income funds, combine low earnings multiples with other indicators, such as cash flow, book value and debt-to-enterprise value.
Unfortunately, the Two Headed Dragon business often finds itself failing because it cannot service its debt burden, due to the lack of cash flow coupled with the fact that it frequently loses access to the capital markets.
And the companies believe that improved cash flow will allow them to reduce debt.
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Financially sound businesses have solid cash flow and a prudent level of debt.
If Chesapeake really is serious about increasing shareholder value, they are going to have to use free cash flow from operations to reduce their debt load.
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