The "cash is king" philosophy has attracted quite a following on Wall Street. In this approach you focus not on a company's earnings but on its cash flow from operations, equal to the sum of earnings and depreciation and amortization, plus or minus changes in working capital items (like inventory or payables) that help or hurt a company's checking account balance. Take cash flow from operations and subtract capital expenditures to get free cash flow. This is what Warren Buffett calls "owner's cash." A company trading at a low multiple of owner's cash is probably a bargain.
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