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Barnes & Noble Inc (NYSE:BKS)
Free Cash Flow
\$92 Mil (TTM As of Oct. 2016)

Barnes & Noble Inc's total free cash flow for the three months ended in Oct. 2016 was \$-108 Mil. Its total free cash flow for the trailing twelve months (TTM) ended in Oct. 2016 was \$92 Mil.

Barnes & Noble Inc's free cash flow per share for the three months ended in Oct. 2016 was \$-1.50. Its free cash flow per share for the trailing twelve months (TTM) ended in Oct. 2016 was \$1.15.

Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Free Cash Flow Growth Rate using free cash flow per share data.

During the past 13 years, Barnes & Noble Inc's highest 3-Year average Free Cash Flow per Share Growth Rate was 100.10% per year. The lowest was -81.80% per year. And the median was -8.30% per year.

Definition

Free Cash Flow is considered one of the most important parameters to measure a companys earnings power by value investors because it is not subject to estimates of Depreciation, Depletion and Amortization (DDA). However, when we look at the Free Cash Flow, we should look from a long term perspective, because any years Free Cash Flow can be drastically affected by the spending on Property, Plant, & Equipment (PPE) of the business in that year. Over the long term, Free Cash Flow should give pretty good picture on the real earnings power of the company.

Note: GuruFocus does not calculate Free Cash Flow when Cash Flow for Capital Expenditures is 0.

Barnes & Noble Inc's Free Cash Flow for the fiscal year that ended in Apr. 2016 is calculated as

 Free Cash Flow (A: Apr. 2016 ) = Cash Flow from Operations + Cash Flow for Capital Expenditures = 195.687 + -94.274 = 101

Barnes & Noble Inc's Free Cash Flow for the quarter that ended in Oct. 2016 is calculated as

 Free Cash Flow (Q: Oct. 2016 ) = Cash Flow from Operations + Cash Flow for Capital Expenditures = -79.373 + -28.935 = -108

Barnes & Noble Inc Free Cash Flow for the trailing twelve months (TTM) ended in Oct. 2016 was 270.678 (Jan. 2016 ) + -74.854 (Apr. 2016 ) + 4.821 (Jul. 2016 ) + -108.308 (Oct. 2016 ) = \$92 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Explanation

Free Cash Flow is very close to Warren Buffetts definition of Owners Earnings, except that in Warren Buffetts Owners Earnings, the spending for Property, Plant, and Equipment is only for maintenance (replacement), while in the Free Cash Flow calculation, the cost of new Property, Plant, and Equipment due to business expansion is also deducted. There, Free Cash Flow is more conservative than Owners Earnings.

In Don Yacktmans calculation of forward rate of return, he uses Free Cash Flow for the calculation. Yacktman explained the forward rate of return concept in detail in his interview with GuruFocus. Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation.

This is what Yacktman said in his March 2012 interview - when the S&P 500 was at 1400:

If the business is stable, this calculation is fairly straightforward. For instance, on the S&P 500 we would normalize earnings. We would then calculate what percentage of those earnings are not reinvested in the underlying businesses and are therefore free. Historically, for the S&P 500, this has been just under 50% of earnings. Currently, we expect the S&P to earn about 70 on a normalized basis, a number which is far below reported earnings due to our adjusting for record high profit margins. \$70 X ½ / 1400 gives you a normalized free cash flow yield of approximately 2.5%.

The historical real growth rate of the S&P 500 (companies) is about 1.5%. Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the S&P 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation).

Therefore, as of Oct16, Barnes & Noble Inc's Forward Rate of Return is

 Forward Rate of Return (Oct16) = Normalized Free Cash Flow / Price + Growth rate = 0.45714286 / 10.3 + 0.1954 = 23.98 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Be Aware

Free Cash Flow within a report period can be affected by management's decisions of capital spending. Therefore, it is important to look at long term when it comes to Free Cash Flow.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Barnes & Noble Inc Annual Data

 Jan07 Jan08 Jan09 Apr10 Apr11 Apr12 Apr13 Apr14 Apr15 Apr16 Cash Flow from Operations 271 435 383 128 199 -24 117 320 -1 196 Cash Flow_CPEX -179 -197 -192 -128 -111 -164 -166 -135 -95 -94 total_freecashflow 92 238 191 0 89 -188 -48 185 -96 101

Barnes & Noble Inc Quarterly Data

 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Cash Flow from Operations -139 194 235 -126 57 -101 290 -50 28 -79 Cash Flow_CPEX -33 -40 -17 -29 -23 -28 -19 -24 -23 -29 total_freecashflow -172 154 218 -155 35 -129 271 -75 5 -108
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