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Investing

Free Cash Flow

What is Free Cash Flow?

Cash a company generates from operations after paying for capital investment.

Understanding Free Cash Flow

Free cash flow is the money left over to pay dividends, buy back shares, pay down debt, or invest in growth. Many analysts consider it harder to manipulate than accounting profit.

A company can report profits while burning cash, or vice versa, so investors often look at both.

Formula

FCF=Operating cash flow−Capital expenditures\text{FCF} = \text{Operating cash flow} - \text{Capital expenditures}
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