Ever wonder about the power of free cash flow? Join us as Eric explains how KAR Auction Services touches more than $25 billion in cash each year, while it captures close to $2 billion in revenue.
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Cash Flow Per Share Metric
Eliminate The Unnecessary
“When you combine multiple companies, you have a lot of opportunity to recognize or enhance shareholder value even as a private company, as well as after a company goes public. The first thing that you want to do is to find out where you are touching paper and where you’re evaluating transactions manually and eliminate those areas using technology. Second, focus on your core business. In the course of building an organization, you end up doing a lot of things that don’t contribute to the mission of the company. So if our job is to sell cars, ‘What are we doing that doesn’t enhance that process?’’”
“A-ha” Moment: Start Paying Dividends
“There’s nothing better to draw attention to your cash flow performance than using that cash to return money to shareholders. That was our ‘a-ha!’ moment. When we started returning money, our stock was trading in the midteens; now it’s trading at over $32 per share.”
Book Pick
Built to Last: Successful Habits of Visionary Companies (Harper Business Essentials)
Interview Links
- Eric’s Site