The Investing for Beginners Podcast - Your Path to Financial Freedom

IFB370: Free Cash Flow Metrics - Margin, Yield, and Conversion Explained


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In episode 370 of the Investing for Beginners Podcast, Dave and Andrew tackle listener questions about PE ratios, target date funds, debt-to-equity ratios, and free cash flow metrics. Learn how to evaluate companies, understand expense ratios in 401(k)s, and use DCF models to value businesses. A must-listen for beginner investors!

  • [00:01:21] Missing PE ratios? It’s often due to negative or missing earnings.
  • [00:03:12] Target date funds simplify rebalancing but limit investment flexibility.
  • [00:06:57] High expense ratios in 401(k)s vary by employer and fund options.
  • [00:11:46] Debt-to-equity ratios must be evaluated alongside interest coverage metrics.
  • [00:18:05] DCF models can include debt, depending on the valuation approach.
  • [00:26:00] Free cash flow margin measures efficiency in converting revenue to cash.
  • [00:27:15] Free cash flow yield helps identify undervalued stocks with strong returns.
  • [00:34:42] Free cash flow conversion shows how well earnings turn into cash flow.

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