Wednesday, August 15, 2012

A Positive: Smaller Free Cash Flows

Free cash flows available to companies to pay dividends or buy back stock fell in the first quarter of 2012, but that is not necessarily a bad thing. While free cash flow fell slightly, selling, general and administrative expenses rose, as did capital spending. Longer cash cycles during the quarter also slowed free cash flows. Because of the generally positive reasons for the decreased free cash flows, indications are that this is positive news.