Question

Analysts calculated that Starbucks total free cash flow for the
months ended in **June 2017** was **$763
million.** Its net income for the months ended in
**June 2017** was **$692 million. From class,
what is the definition of free cash flow?** If you are
considering an investment in SBUX, should you be more interested in
free cash flow or net income?

Answer #1

Free cash flows, is the cash left over in the company after paying for all the operating expenses, capital expenditures and working capital expenses.

As an investor i would be more interested in the Free cash flows that a company is generating, the reasons being

- Free cash flows are difficult to manipulate.
- Free cash flows determines the cash balance of the company and since cash is king a compony which does not generate enough cash flows will not be surviving for long.

Since, Starbucks is generating higher cash flows i would be willing to invest in the company as the company's prospects looks positive.

Analysts calculated that Starbucks total free cash flow for the
months ended in June 2017 was $763
million. Its net income for the months ended in
June 2017 was $692 million. From class,
what is the definition of free cash flow? If you are
considering an investment in SBUX, should you be more interested in
free cash flow or net income?

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