What is 'Free Cash Flow  FCF'
Free cash flow (FCF) is a measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base. Free cash flow is important because it allows a company to pursue opportunities that enhance shareholder value. Without cash, it's tough to develop new products, make acquisitions, pay dividends and reduce debt. FCF is calculated as: EBIT(1Tax Rate) + Depreciation & Amortization  Change in Net Working Capital  Capital Expenditure. It can also be calculated by taking operating cash flow and subtracting capital expenditures.
BREAKING DOWN 'Free Cash Flow  FCF'
Some believe that Wall Street focuses myopically on earnings while ignoring the "real" cash that a firm generates. Earnings can often be clouded by accounting gimmicks, but it's tougher to fake cash flow. For this reason, some investors believe that FCF gives a much clearer view of the ability to generate cash (and thus profits).It is important to note that negative free cash flow is not bad in itself. If free cash flow is negative, it could be a sign that a company is making large investments. If these investments earn a high return, the strategy has the potential to pay off in the long run.FCF is a better indicator than the P/E Ratio and here's why  Read Free Cash Flow Yield: The Best Fundamental Indicator and FCF: Free, But Not Always Easy

Trailing FCF
A company's free cash flow for the previous 12 months. Trailing ... 
Price to Free Cash Flow
A valuation metric that compares a company's market price to ... 
Free Cash Flow To Sales
A ratio that illustrates the percentage of free cash flow to ... 
Cash Flow
The net amount of cash and cashequivalents moving into and out ... 
Free Cash Flow Yield
An overall return evaluation ratio of a stock, which standardizes ... 
Cash Flow From Investing Activities
An item on the cash flow statement that reports the aggregate ...

Markets
Free Cash Flow: Free, But Not Always Easy
Free cash flow is a great gauge of corporate health, but it's not immune to accounting trickery. 
Professionals
Free Cash Flow
Free cash flow has its limits, but it is a good starting point for testing a company's fundamentals. 
Investing Basics
Free Cash Flow Yield: A Fundamental Indicator
Free cash flow can measure a businessâ€™s performance as if youâ€™re looking at its net income line. 
Fundamental Analysis
Analyze Cash Flow The Easy Way
Find out how to analyze the way a company spends its money to determine whether there will be any money left for investors. 
Markets
Cash Flow Indicator Ratios: Free Cash Flow/Operating Cash Flow Ratio
By Richard Loth (Contact  Biography)The free cash flow/operating cash flow ratio measures the relationship between free cash flow and operating cash flow. Free cash flow is most often defined ... 
Markets
Fundamental Analysis: The Cash Flow Statement
By Ben McClureThe cash flow statement shows how much cash comes in and goes out of the company over the quarter or the year. At first glance, that sounds a lot like the income statement in that ... 
Investing Basics
Analyze Cash Flow The Easy Way
Cash flow statements reveal how a company spends its money and where that money comes from. 
Fundamental Analysis
Cash Flow From Investing
Cash flow analysis is a critical process for both companies and investors. Find out what you need to know about it. 
Markets
Operating Cash Flow: Better Than Net Income?
Differences between accrual accounting and cash flows show why net income is easier to manipulate. 
Term
Cash Flow Statement and Financial Health
A cash flow statement records the amounts of cash and cash equivalents entering and leaving a company.

What is the difference between cash flow and free cash flow?
Learn about the main differences between cash flow and free cash flow. In addition to the differences, learn how to calculate ... Read Answer >> 
What is the formula for calculating free cash flow?
Read about some of the formulas for free cash flow, why investors perform cash flow analysis and what a high or rising cash ... Read Answer >> 
How do you calculate free cash flow?
Find out how to calculate free cash flow (FCF), learn why the figure is important and examine the case of Google's FCF during ... Read Answer >> 
What's the difference between free cash flow and operating cash flow?
Learn the difference between free cash flow and operating cash flow. Explore how analysts use earnings and cash flow when ... Read Answer >> 
How do I calculate free, discounted and operational cash flow in Excel?
Take a quick look at how you can calculate a company's operating cash flow, free cash flow and discounted cash flows using ... Read Answer >> 
What are some examples of how cash flows can be manipulated or distorted?
Read about some of the most common accounting techniques that can be used to manipulate the operating cash flow on a company's ... Read Answer >>