The Free Cash Profile: Insight into the Cash Flow Implications of Growth - An Analysis Using 2010 Data

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dc.contributor.author Mulford, Charles W.
dc.contributor.author Karnes, Chad M.
dc.date.accessioned 2011-06-24T15:08:45Z
dc.date.available 2011-06-24T15:08:45Z
dc.date.issued 2011-05
dc.identifier.uri http://hdl.handle.net/1853/39322
dc.description.abstract With the end of the U.S. recession, companies are once again enjoying renewed, if limited, revenue growth. In terms of cash flow generation, as revenues grow, there are certain industries and companies that will benefit more than others. It is a common misbelief that growth requires a use of cash. The reality is that there are many companies that actually generate increasing amounts of free cash flow as revenues grow. These companies have what we refer to as a positive Free Cash Profile. The purpose of this study is to analyze the Free Cash Profile of forty-four non-financial industries and all firms within those industries with revenues in excess of $100 million. Our goal is to identify those industries that should generate cash as revenues continue to grow as well as those industries that will consume cash as growth resumes. We also identify companies within the industries driving those trends with the intent of identifying those companies that will benefit most with revenue growth. Overall, the median Free Cash Profile for our sample is 4.95%. However, eighteen industries, or forty percent of our sample, have a negative Free Cash Profile. However, even in these industries, there are numerous firms with positive profiles. The firms with positive Free Cash Profiles enjoy higher operating cushions and are more adept at managing operating working capital and limiting capital spending than firms with negative Profiles. en_US
dc.language.iso en_US en_US
dc.publisher Georgia Institute of Technology en_US
dc.subject Economics en_US
dc.title The Free Cash Profile: Insight into the Cash Flow Implications of Growth - An Analysis Using 2010 Data en_US
dc.type Technical Report en_US
dc.contributor.corporatename Georgia Institute of Technology. College of Management en_US
dc.contributor.corporatename Georgia Institute of Technology. Financial Analysis Lab en_US


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