What is free cash flow?

Free cash flow is the cash a business generates after accounting for capital expenditures needed to maintain or expand the asset base. It is a key indicator of financial health and the ability to pay dividends, reduce debt, or reinvest.

How is free cash flow different from net income?

Net income is an accounting profit figure. Free cash flow is actual cash available after necessary investments in the business. A company can be profitable on paper but have negative free cash flow.

Why do investors care about free cash flow?

It shows the real cash the business can distribute to owners or use for growth without needing additional financing. Strong and growing free cash flow is a positive signal.

Free Cash Flow Calculator

Free Cash Flow - Calculate and analyze your financial metrics with this comprehensive calculator.

Free Cash Flow (FCF) Calculator

Measure discretionary cash available for growth, dividends, and shareholder returns

Free Cash Flow (FCF)

Free cash flow represents cash available to investors after funding operations and capital expenditures.

Formulas

FCF = Operating Cash Flow − CapEx
FCF = EBIT × (1 − tax) + Depreciation − ΔWorking Capital − CapEx

Example

OCF 120k, CapEx 45k → FCF = 75k.

FAQs

Unlevered vs levered?
Unlevered excludes interest; levered includes financing effects.

Use cases?
Valuation (DCF), dividend capacity, and financial health.

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