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It is important to understand a company’s ability to generate cash without external financings. We look at measures such as Free Cash Flow (FCF) Efficiency* to help gauge the resources available for strategic opportunities such as undertaking acquisitions, investing in the business, strengthening the balance sheet, and to assess the robustness of a company’s earnings performance.

Tiffany’s historical FCF Efficiency is volatile due to the nature of its business (it is in the consumer discretionary/luxury sector, and it is also a significant commodity purchaser). However, the results from the last few years seem to suggest improvement.

Negatively affected by the $450M Swatch arbitration ruling.


* Free Cash Flow Efficiency is defined as Free Cash Flow / Net Income and it illustrates how efficient the business is at generating free cash flow versus its reported/accounting net income.

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Elevation Capital Research Annual 2018  

Elevation Capital Research Annual 2018