OPS Report

Operational Cash-Flow Per Share (OPS)

Their stock pickers and managers continued to give 'buy' signals almost to the last gasp of these companies. That was especially true of Enron where in the final week before its historic meltdown, most stock houses were saying buy, buy, buy. Had they or their investors known the true pathetic state of Enron's cash and cash-flow positions, they would have sold, sold, sold.

One of the reasons that so many were caught in this trap is because of the herd mentality that relies so heavily on Earnings Per Share (EPS). If you talk to any banker or listen to the talking heads on cable; when discussing the strength of companies, they always tout EPS. Does the name Arthur Anderson ring a bell?

That's right - Arthur Andersen is no longer in business. Putting such a premium on EPS data has allowed for some very creative accounting. After all, what is EPS really? Generally, it whatever the manager, CEO or accountant says it is. It gives them the means to hide or shelter the true condition of a company.

Good news is on the way! Brilliant and saavy investors like Warren Buffett know that the true strength of companies revolves around their cash and cash-flow positons.

What if you were personally in trouble, perhaps having lost your job. Having available cash and cash-flow could allow you to weather this period until you got another job. This simple illustration can begin to help you understand Operational Cash-Flow Per Share (OPS).

You are going to be hearing a lot more about OPS in the near future. By opting in to be the first to hear breaking news about OPS via Ron Firmin's newsletter, you will be given the tools to more intelligently and more safely make investment decisions.