As active stock investors, we look for companies that can potentially be worth more than what they are selling now.

These can be companies that was doing well in the past, but currently not doing very well, but are showing some tell tale signs profitability may be returning. These could also be companies that have the hidden ability to do well and grow their profitability over long duration. The market might be underestimating their ability to grow their profits.

How do we sense if the company is worth more than the price that it currently trades for?

A company’s value is a summation of its stream of future cash flows.

If we wish to determine roughly the value of the company then we need to appreciate its future cash flow.

That often means, you need to appreciate the cash flow in the past.

How do we make sense of the …