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Dear thalseth,

First, you are using Stewart's definition of FCF, which isn't the same as the Fool's.

Second, if you use Stewart's terminology, your line "NOPAT * (1 - tax rate)" would be "NOPBT", or "net operating profit before taxes". You are calculating NOPAT.

Third, I think that it may be more accurate to use the cash taxes rate in the cash flow statement. However, I'm a bit confused myself about this, since Stewart doesn't use the cash flow statement at all. Yet I don't see how to get the 32% tax rate.

Fourth, for an opinion more accurate than mine, try the Boring Stocks board, guys like FoolishFloyd there will go through these calculations in tremendous depth.

Fifth, it is hard for me to say whether this is "good, bad or indifferent" without knowing a bit more about the company (what does it do, etc.? BTW, why did you pick them?). In particular, going free cash flow negative isn't necessarily a bad thing for an expanding company. We need to get a "trend" or projection over several years for FCF to be useful.

Lleweilun Smith
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