Growth & Momentum
FCF Growth
Shows how much free cash after required reinvestment rises or falls between comparable periods. To interpret it correctly, the base must be comparable and positive, because acquisitions, FX, inflation, accounting changes or near-zero amounts can exaggerate the
FCF Growth
fcfGrowth · Growth & Momentum
- Definition
- Shows how much free cash after required reinvestment rises or falls between comparable periods. To interpret it correctly, the base must be comparable and positive, because acquisitions, FX, inflation, accounting changes or near-zero amounts can exaggerate the signal.
- Calculation
- (Current period value - prior comparable period value) / absolute prior comparable period value.
- Uses
- Useful for detecting acceleration, deterioration and persistence. It works best in businesses with recurring or secular demand; it is weaker in cyclicals, commodities, banks, insurers and turnarounds. Cross-check with margins, ROIC, FCF per share, debt and dilution.
