Warren Buffet uses something called Owners Earnings to value a company
and it is given by: Owner earnings = Net income + depreciation &
amortization +/- one-time items – capital expenditures. However you
must be wondering why was working capital not considered. Here by Capex
he means any amount which the company has to spend on continuing its
operations and hence it includes Working capital changes.
Harish Srigiriraju, NMIMS
Harish Srigiriraju, NMIMS
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