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Kenneth S. Hackel, C.F.A.
"When I first began managing money in the early 1980's, I was astonished how primitive the analysis of cash flow was for security analysts. Over the next 15 years, as I began to construct sophisticated models using fundamental data, the intense analysis of cash flow and debt came to the forefront. Then, concurrent with the technology bubble, it fell out of favor, only to get back in vogue. I truly hope, for the benefit of so many of the new investors, it is here to stay." |
Kenneth S. Hackel, C.F.A., was founder of Systematic Financial Management Inc., an investment firm that specialized in the analysis of corporate cash flow. He is the author of many articles on investments and is internationally recognized as a leading expert in the field. His cash flow related comments has appeared in the leading financial media, and have appeared on Wall Street Week, CNBC, and CNN
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Joshua Livnat, PhD.
I have always believed that an entity's risk is driven by two primary factors - its operating and its financial risk. Consequently, my experience illustrated the importance of assessing the stability and growth of cash flows as a measure of operating risk. Instead of focusing on earnings stability, a prudent investor should focus on free cash flows, the operating cash flows in excess of capital expenditures, which are less likely to be affected by accounting manipulations. The financial risk is a combination of factors, which include the relative magnitude of financial leverage, the stability of free cash flows, and the liquid resources available for the firm. A combination of these risk factors is essential for any careful investment. |
Joshua Livnat is a Full Professor and former Chairman of the Accounting, Taxation, and Business Law Department at New York University's Stern School of Business. He has been a Certified Public Accountant since 1986. Professor Livnat taught at various universities in the US and abroad, including the University of Texas at Austin, The University of Washington at Seattle, the University of California at Berkeley, Vanderbilt University, Northwestern University, Hebrew University of Jerusalem, Chulalongkorn University in Thailand, the University of Auckland in New Zealand, the Australian Graduate School of Management, and the Helsinki School of Economics.
Professor Livnat's research has primarily been in the areas of financial accounting (the relationship between accounting information and security prices), security analysis, and electronic commerce.
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