Cash flow statement
Free Cash Flow
Shows liquidity left after funding ordinary operations and capex. It approximates capacity to reduce debt, repurchase shares, pay dividends or reinvest without external financing.
Free Cash Flow
freeCashFlow · Cash flow statement
- Definition
- Shows liquidity left after funding ordinary operations and capex. It approximates capacity to reduce debt, repurchase shares, pay dividends or reinvest without external financing.
- Uses
- Useful for separating accounting profit from real cash generation and tracking reinvestment, acquisitions, debt, dividends and buybacks. Especially important in mature businesses, cyclicals, roll-ups and high-capex companies. It can mislead through working-capital timing, irregular capex, refinancing or M&A. Cross-check net income, EBITDA, maintenance capex and net debt.
