Comparing a company's free cash flow to its earnings is a way to spot potential problems in how a company funds its growth and operations.
In our Toolkit 6 for Windows software program, you can add a graph of historical Free Cash Flow per Share to your Stock Selection Guide by checking the "Free Cash Flow/Share" option in the Visual Analysis window. (The data provided by the StockCentral and BetterInvesting's data service now includes "Free Cash Flow/Share," so no additional data entry is required if you are using those data services. If you are entering data by hand into Toolkit 6, you may use Cash Flow per Share.)
If Free Cash Flow/Share and Earnings/Share don't share the same long-term trends, more investigation into the company's finances may be required.