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.
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.
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.
When the flow of debt from the market's giants dries up, it becomes harder to price bonds from the minnows, adding to their trouble in raising funds.
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.
In fact, cash flow increased, debt decreased and the company reiterated the results were short term in nature.
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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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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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.
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.
By having a dedicated fund to invest in distressed debt, they have a better flow of information to see where the investment opportunities lurk.
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.
Raising taxes to bring in money for the government is unlikely to work, and recent austerity programs in Greece have showed to be counter-productive and can actually slow economies and revenue flow, worsening the debt outlook.
Without tackling the much more controversial issue of who can invest in these companies (the crowdfunding provision), or adding a penny to national debt, regulators will increase the flow of capital from qualified investors to the most productive areas of our economy.
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.
With financing costs down, however, rising debt multiples have not sliced cash-flow coverage for new LBOs.
Foster recommends focusing on firms with net debt of less than two times cash flow as measured by Ebitda.
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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.
And the companies believe that improved cash flow will allow them to reduce debt.
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