On Thursday, for-profit educator DeVry (NYSE:DV) reported its fiscal Q4 and full-year 2006 earnings numbers. How did it do? Well, according to an Associated Press story on the report, enrollment and revenues "jumped," and earnings "skyrocketed."

And the result for the stock was just what you'd expect: It fell 11%.

That was my reaction, too -- and we aren't the only ones wondering why investors gave DeVry detention last week. Reading the same numbers that you, I, and all the other investors in the world were reading, my fellow Fool Anders Bylund concluded that "this looks to me like a business with healthy organic growth." Indeed, DeVry reported quarterly sales growth that just edged out Wall Street's projections, even if its earnings came in a couple of cents lighter than expected.

Business 201
So much for the basic GAAP numbers, and the "this quarter they did X" analysis. That's Business 101, folks, and it's where most financial reporting begins and ends. At the Fool, we like to look a bit deeper into things. So in that spirit, let's examine what really matters to investors: how much cash-money their company is earning. For that, we turn to the cash flow statement.

Comparing DeVry's fiscal 2006 results with those from fiscal 2005, we see that the company generated $65.5 million in free cash flow this year -- 46% more than last year and 52% more than its net income figure reflects. DeVry managed this by cutting back severely on capital expenditures. In 2005, the firm spent $42.9 million on improving and building out its infrastructure. In 2006, DeVry scaled that back to just $25.3 million.

Meanwhile, the firm continued putting its free cash flow to good use, strengthening its balance sheet. One year ago, long-term debt stood at $175 million -- roughly equal to cash on hand. Over the last year, the company has paid down nearly two-thirds of what it owes, and now has $65 million in long-term debt outstanding ($30 million less than last quarter), against $151 million in cash.

With its balance sheet firmed up considerably, capital expenditures moderating, and free cash flowing strongly, a Fool has to wonder whether DeVry is still the "prize" it was looking at back in late 2004. On the one hand, the firm's hefty purse, and proven ability to keep that purse full, should make it more attractive than ever to a private buyer. On the other, these successes may have persuaded DeVry to keep going alone instead of competing head-to-head with rivals such as ITT (NYSE:ESI), Career Education (NASDAQ:CECO), and Corinthian (NASDAQ:COCO). If so, that could reduce the likelihood it would accept a buyout offer, putting in doubt the prospect that shareholders will be awarded a premium price in the near future -- and maybe helping to explain last week's sell-off.

Learn more about the for-profit educators in our Back to School series:

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Fool contributor Rich Smith does not own shares of any company named above.