Good point. Over the long run, companies can never escape the reality of how reinvestment rates track with sustained revenue growth rates. The interesting thing about decomposing financials into operating vs nonoperating is seeing how a negative investment rate is additive to free cash flow. In other words, companies are not generating FCF from P&L but from reductions in the balance sheet. No bueno!
Brilliant breakdown of the cash tax vs reported tax implications here. The observation about declining invested captial despite 24% ROIC is something I've noticed in SaaS too, where the best moats sometimes come from data network effects rather than physical assets. When platforms hit that flywheel moment, maybe reinvestment becomes more about selective optimzation than broad expansion.
Good point. Over the long run, companies can never escape the reality of how reinvestment rates track with sustained revenue growth rates. The interesting thing about decomposing financials into operating vs nonoperating is seeing how a negative investment rate is additive to free cash flow. In other words, companies are not generating FCF from P&L but from reductions in the balance sheet. No bueno!
Brilliant breakdown of the cash tax vs reported tax implications here. The observation about declining invested captial despite 24% ROIC is something I've noticed in SaaS too, where the best moats sometimes come from data network effects rather than physical assets. When platforms hit that flywheel moment, maybe reinvestment becomes more about selective optimzation than broad expansion.