What Free Cash Flow can Meanby Jack Hough
Free cash flow is a measure of the money companies have left after paying their various operating costs each quarter. Some think of free cash flow as a more reliable measure of profitability than earnings, because it counts only money that's currently changing hands. Others argue that companies maximize free cash flow only after opportunities for internal investment, and hence growth prospects, have dried up. For internet companies, free cash flow may be regarded as a measure of maturity. High free cash flow brings with it financial stability and predictability, but also eliminates the excitement and uncertainty that often fuels rapid stock movements.