Cashflow clues

... cont'd from yesterday...

Continued discussion about Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage

Step Three: Examine the Cash Flow Statement

1. Capital Expenditures. ECDCA’s use a smaller portion of its earnings for capital expenditure than others. Capital Expenditure per Earnings year-after-year under 25% is good although a number as high as 49% is acceptable.

2. Retirement of Stock. This refers to stock buy-backs by the company. Any amount year-after-year indicates an ECDCA.

...cont'd tomorrow...

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