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Investing Strategies / It's Earnings That Count


Subject:  Re: Inv in DTA Date:  7/16/2006  11:03 AM
Author:  TMFKitKat Number:  1129 of 1817


Duh?Took me a week but........

I see where you are going with this thought on deferred assets.

Since deferred assets are taxes paid that will be recouped in the future on IRS tax returns, you are concerned about the swelling asets that go into the invested capital that decreases free cash flow. Its a valid point
If you want to delete the DTA then you would also need to eliminate the DTL

Matthew (TMF Rivet) has suggested backing out all tax related items when looking at invested capital.

Huge amounts of deferred tax assets would make FCF lower
But you are still stuck with a company with decreased(even negative by your account) earnings due to options expense. Are you in favor of also taking that out of the free cash flow calculation?
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