free cash flow
DefinitionOperating cash flows (net income plus amortization and depreciation) minus capital expenditures and dividends. Free cash flow is the amount of cash that a company has left over after it has paid all of its expenses, including investments. Negative free cash flow is not necessarily an indication of a bad company, however, since many young companies put a lot of their cash into investments, which diminishes their free cash flow. But if a company is spending so much cash, it should have a good reason for doing so and it should be earning a sufficiently high rate of return on its investments. While free cash flow doesn't receive as much media coverage as earnings do, it is considered by some experts to be a better indicator of a company's financial health.
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free cash flow is ...
... part of the Accounting and Investor Relations subjects.
... part of the Accounting and Investor Relations subjects.
... #99 on our list of the most popular terms.
... an essential investing term.
Related Terms
free cash flow appears in these other terms
free cash flow to equity, levered free cash flow, free cash flow yield
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