Sustainable distributable cash flow (DCF) |
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The focus for MLPs should be on cash flow rather than earnings. This is due to the fact that cash-flow determines how much can be paid out to owners in the form of distributions. Earnings may misrepresent true economic value because of accounting conventions for non cash items such as depreciation and amortization. Instead management focuses on distributable cash flow per unit (DCF), as this determines how much cash-flow can be paid out in the form of distributions.
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