Free Cash Flow

Free cash flow (FCF) represents the cash that a company generates after accounting for cash outflows to support its operations and maintain its capital assets.

Unlike other measures that are used to analyze cash flow in a company, such as earnings or net income, free cash flow is a measure of profitability that excludes the non-cash expenses of the income statement. It also includes spending on equipment and assets, as well as changes in working capital from the balance sheet.

# Key Takeaways

• Free cash flow (FCF) is a company’s available cash repaid to creditors and as dividends and interest to investors.
• Management and investors use free cash flow as a measure of a company’s financial health.
• FCF reconciles net income by adjusting for non-cash expenses, changes in working capital, and capital expenditures.
• Free cash flow can reveal problems in the financial fundamentals before they become apparent on a company’s income statement.
• A positive free cash flow doesn’t always indicate a strong stock trend.

# Calculation

# With Cash Flow Statement

### With Income Statement And Balance Sheet