Four ways to test cash-flow

Working out a company's cash-flow is a good way to judge whether a stock is well-managed and good value. Phil Oakley explains the four ways you can measure cash-flow, and tips one cash-rich stock to buy now.

Equity investing is all about cash. We invest in shares and expect a cash return in the form of dividends and eventual sale proceeds. Yet companies often don't talk much about cash they prefer you to focus on profit related measures such as earnings per share (EPS). So here I reveal how to use the cash-flow statement to help you select the best investments.

What's wrong with profit?

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Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.

 

After graduating with a MSc in International Banking, Economics & Finance from Liverpool Business School in 1996, Phil went to work for BWD Rensburg, a Liverpool based investment manager. In 2001, he joined ABN AMRO as a transport analyst. After a brief spell as a food retail analyst, he spent five years with ABN's very successful UK Smaller Companies team where he covered engineering, transport and support services stocks.

 

In 2007, Phil joined Halbis Capital Management as a European equities analyst. He began writing for MoneyWeek in 2010.