Dell (DELL) Free Cash Flow : $3,850.00 Mil (TTM As of Jul. 2013)

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What is Dell Free Cash Flow?

Dell's total free cash flow for the months ended in Jul. 2013 was $1,514.00 Mil. Its total free cash flow for the trailing twelve months (TTM) ended in Jul. 2013 was $3,850.00 Mil.

Dell's Free Cash Flow per Share for the months ended in Jul. 2013 was $0.86. Its free cash flow per share for the trailing twelve months (TTM) ended in Jul. 2013 was $2.20.

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.

Dell Free Cash Flow Historical Data

The historical data trend for Dell's Free Cash Flow can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Dell Free Cash Flow Chart

Dell Annual Data

Trend

Jan04

Jan05

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Jan12

Jan13

Free Cash Flow

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1,454.00

3,539.00

3,525.00

4,852.00

2,770.00

Dell Quarterly Data
	Oct08	Jan09	Apr09	Jul09	Oct09	Jan10	Apr10	Jul10	Oct10	Jan11	Apr11	Jul11	Oct11	Jan12	Apr12	Jul12	Oct12	Jan13	Apr13	Jul13
Free Cash Flow	Get a 7-Day Free Trial															517.00	1,222.00	1,311.00	-197.00	1,514.00

Dell Free Cash Flow Calculation

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.

Dell's Free Cash Flow for the fiscal year that ended in Jan. 2013 is calculated as

Free Cash Flow (A: Jan. 2013 )	=	Cash Flow from Operations	+	Capital Expenditure
	=	3283	+	-513
	=	2,770.00

Dell's Free Cash Flow for the quarter that ended in Jul. 2013 is calculated as

Free Cash Flow (Q: Jul. 2013 )	=	Cash Flow from Operations	+	Capital Expenditure
	=	1678	+	-164
	=	1,514.00

Free Cash Flow for the trailing twelve months (TTM) ended in Jul. 2013 adds up the quarterly data reported by the company within the most recent 12 months, which was $3,850.00 Mil.

Dell (DELISTED:DELL) Free Cash Flow 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).

For the growth part of the Forward Rate of Return calculation, GuruFocus uses the 5-year average growth rate of EBITDA per share as the growth rate, and the growth rate is always capped at 20%. For the Free Cash Flow we use per share data averaged over seven years. The reason we use seven years is because research shows that seven years is the length of the typical business cycle.

Therefore, as of Jul13, Dell's Forward Rate of Return (Yacktman) % is

Forward Rate of Return (Yacktman) % (Jul13)	=	Normalized Free Cash Flow	/	Price	+	5-Year EBITDA Growth Rate
	=	1.77219048	/	12.66	+	0.076
	=	21.60 %

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.

Dell Free Cash Flow Related Terms

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Dell (DELL) Business Description

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http://www.dell.com

Dell Inc is a Delaware Corporation, which was founded in 1984. The Company offers a range of technology solutions, including servers and networking products, storage products, services, software and peripherals, mobility products, and desktop PCs. The Company sells its products and services directly to customers through dedicated distribution channels, such as retailers, distributors, and resellers. Its business segments are Large Enterprise, Public, Small and Medium Business ('SMB'), and Consumer. Large Enterprise customers include large global and national corporate businesses. Public customers, which include educational institutions, government, health care, and law enforcement agencies, operate in their own communities. SMB segment is focused on helping small and medium-sized businesses get the most out of their technology by offering scalable products, services, and solutions. Consumer segment is focused on delivering what customers want from the total technology experience of entertainment, mobility, gaming, and design. The Company designs, develops, manufactures, markets, sells, and supports a range of products, solutions, and services. The Company also provides various customer financial services to its Commercial and Consumer customers. Its enterprise solutions include servers, networking, and storage products. The Company's services include a range of configurable IT and business services, including infrastructure technology, consulting and applications, and product-related support services. The Company offers Dell-branded printers and displays and a multitude of competitively priced third-party peripheral products such as printers, televisions, notebook accessories, mice, keyboards, networking and wireless products, digital cameras, and other products. The Company also sells a range of third-party software products, including operating systems, business and office applications, anti-virus and related security software, entertainment software, and products in various other categories. Client Products offers a variety of mobility and desktop products, including notebooks, workstations, tablets, smartphones, and desktop PCs, to its Commercial and Consumer customers. The Company offers or arranges various financing options and services for its Commercial and Consumer customers in the U.S. and Canada through Dell Financial Services ('DFS'). DFS offers a range of financial services, including originating, collecting, and servicing customer receivables related to the purchase of Dell products. DFS offers private label credit financing programs to qualified Consumer and Commercial customers and offers leases and fixed-term financing to Commercial customers. The Company sells its products and services directly to customers and through various other sales distribution channels, such as retailers, third-party solution providers, system integrators, and third-party resellers. Its customers include large global and national corpora