Free cash flow (FCF)
Cash left after running the business and paying for its upkeep and growth: what could go to owners, debt or acquisitions.
Worked example · a round-number company
Operating cash flow$1.2B−Capex$200M=Free cash flow$1.0BHow to read it
↑Higher is better. Steady, growing free cash flow is what ultimately pays owners.
Keep in mind
- Stock-based pay isn't a cash cost, so FCF looks better at companies that pay staff in shares.
- Acquisitions are not subtracted.