Brock is a CFA and CPA with more than 20 ... a stock is estimating the series of operating cash flow projections. There are a number of inherent problems with earnings and cash flow forecasting ...

Non-cash expenses, for example ... can look at low or negative free cash flow as a warning to exit a position before other investors notice future problems in income statements.

The formula for WACC can be written as: One simple definition of the value of a firm (and one taught in CFA courses) is equal to the endless stream of free cash flows discounted by WACC.