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Extract Free Cash Flow w/o Div in reported curr
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TOPIC: Extract Free Cash Flow w/o Div in reported curr

Extract Free Cash Flow w/o Div in reported curr 1 month, 3 weeks ago #2660

  • Pottz
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Hi,
I am in the process of validating the Reuters data via Screen.co with prev used Bloomberg data. This is for a fundamentals based trading algorithm I have been running for 4 years (data sourced from Bloombergs before)

Currently I am trying to resolve the Free Cash Flow issues. In a recent email you informed me that "Reuters sometimes deducts dividends paid when calculating "free cash flow""

I am trying to do some data comparisons btw a prev extract from Bloomberg with the Screener data, bloomberg previously reported all data in the orig report currency (mostly AUD with a few USD).

I have a variable that calculates as follows:

Free Cash Flow (in report curr) =
((Free Cash Flow per share-most recent FY * Basic Shares Outstanding(A)) * Currency Exchange Rate to USD(A))

Minus

Dividends Paid(A) * Currency Exchange Rate to USD(A)

(I used FCF per share as I could not find a Free Cash Flow A field - is there one?)

Since Div is negative this effectively adds back the dividend. This is giving me the closest comparison to the Bloomberg numbers but there are still some discrepanceis, so I wanted to have my approach sense checked before I delve into the other details. Is the above sensible?

I am getting close (+-10%) on about 16/30 of the top 30 shares I have started the analysis on. I get a better correllation with the shares that report in USD already which leads me to think there might be some timing issues with the curr conversions (on the AUD stocks).

Any assistance with the above would be of much value. I am not looking for 100% match as I understand there will be differences in approach on some fields, but would like to have an understanding of the deltas to be able to evaluate the impact on my model.

Thanks in advance.

Steve
Steve

Re: Extract Free Cash Flow w/o Div in reported curr 1 month, 3 weeks ago #2661

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Steve,

Your approach makes sense. To calculate free cash flow for the last fiscal year, you could also use the formula:

Total Operating Cash Flow(A) + Capital Expenditures(A)

instead of using the ratio variable and multiplying by the number of shares. You would also not need to worry about adding back the dividend. Since capital expenditures is negative, you add it rather than subtract it to get free cash flow.

That might be a closer match, since it doesn't rely on the share count (which could be used differently in Bloomberg vs. Reuters).



Thanks,
Lenny Grover
Founder/CEO
FinToolbox/Screener.co

Re: Extract Free Cash Flow w/o Div in reported curr 1 month, 3 weeks ago #2668

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Thanks - that made a big difference with a much closer fit now.

I have put this data field in the "good enough for now" category, while I drill down on a few of the othre fields.

Thanks for the help.
Steve
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