Where to get the Value for Initial Cash Flow?

The Initial Cash Flow of the company can be found in the Cash Flow Statement of the annual report. It is actually the Operating Cash Flow/ Cash From Operating Activities for the Current Fiscal Year.

Below is an example of where to get this value from the POEMS Brokerage Account. From this example, the initial Cash Flow for BreadTalk is $42.60 mil. Note that all the figure is in Million unless specify.

• The Time Period Must be Annual
• Look at the Current Year
• Look at the Cash From Operating Activities

Another Example is to get it from Finance Google. Go to the Financial Section and Click on Cash Flow. Remember to select Annual Data and look under the Cash From Operating Activities Section.

How to get the Cash Flow Growth Rate?

Well, this is a tricky question! Note that if the company has inconsistent growth, meaning it has a lot of negative cash flow for some of the year, you cannot use Discounted Cash Flow method! There is no way you can get a reasonable Cash Flow growth rate from a inconsistent growth company.

So you have to make sure that their Cash Flow is consistently increasing every year!

One simple method to get the growth of a good company is :

Growth Rate = ( Cash Flow at Year N / Cash Flow at Year N-5 ) ^ { 1/ (N-5-1) }  - 1

Another Method is to get the average growth of the cash flow for every year.

How to determine the Inflation Rate?

Inflation rate is the inflation rate for the country. This is usually around 5-7%. You can try google for an exact amount for it.

How to determine “Projected No. of Years”?

It should be reasonably a big number. Usually 5-10 years will be good enough.

How to get the value “Number of Common Shares Outstanding”?

You can get this figure easily from the Annual Report under the Balance Sheet section.

Look for “Total Common Shares Outstanding”. That value is also usually represented in million.