Take notice when you find the following in a press release:

"The company believes that free cash flow is an important measure of the company's quality of earnings and its ability to reinvest in the business."

Now this is the kind of sweet logic that makes a Fool's heart go pitter-patter. Free cash flow is one of the key variables that we use to see how an enterprise stacks up at the most basic level: cash creation. Some Foolish investors also use a form of free cash flow know as structural free cash flow (SFCF) or owner earnings.

So where did the above statement come from? None other than the company who helps you find your way around in this world: Garmin (NASDAQ:GRMN).

Global positioning systems (GPS) have been the rave of late, and not surprisingly, Garmin has once again found the "X" on its customers' map. For the fourth quarter, the company grew sales by 30% to $220.9 million. Revenues from consumer products increased 27%, while aviation sales increased 42%. Likewise, its sales continue to gain traction abroad, with sales up 41% and 49% in Europe and the Asia-Pacific region, respectively.

From these results, it produced net income of $47.6 million. Because of a negative impact of foreign currency exchange, its earnings experienced a year-over-year decrease of $7 million. Otherwise, the company's net income would be $25.3 million higher for the period.

Similarly, Garmin's 2004 annual results were hit. For the year it produced $1.89 in earnings per share, but the number would've been $2.07 in EPS without the impact. Despite this hurdle, the company had another outstanding year, with overall sales up 33%.

Not surprisingly, its stellar 2004 operating margin of 36% -- lower than 2003's figure of 40% -- has permitted Garmin to achieve exceptional levels of owner earnings. Its trailing-12-month structural free cash flow (SFCF) comes in at a robust $148.1 million. This kind of cash generation enables the company to maintain a squeaky-clean balance sheet, with $573.6 million in cash and marketable securities.

Owner earnings tell us a part of the story, but we need to have a context to measure the worth of a stock. Garmin carries an enterprise value (EV) of $5.3 billion and subsequently trades at 35 times its SFCF. With its 2005 earnings and revenues expected to increase at a blended growth rate of 18%, the company's stock is expensively priced at around $55.

Garmin's cash-producing machine is firing on all cylinders, but Foolish investors will want to track its EV/SFCF to navigate toward a better buying opportunity in the near future.

Fool contributor Jeremy MacNealy knows what it's like to make a wrong turn on a mountain trail and wish he had a Garmin GPS to find his way out. All the same, he does not own its handheld GPS or its stock.