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

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 ... 
Levered Free Cash Flow
The free cash flow that remains after a company has paid its ... 
Cash Value Added  CVA
A measure of the amount of cash generated by a company through ... 
Cash Flow From Financing Activities
A category in the cash flow statement that accounts for external ... 
Free Cash Flow Per Share
A measure of a company's financial flexibility that is determined ...

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. 
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 ... 
Stock Analysis
This LittleKnown Ratio Reveals The Market's Top Bargains
With the ink dry on 2013 financial results, investors can get a fresh gauge on how companies fared over the past year. #ad_banner#By and large, 2013 a very good year for corporate America, ... 
Retirement
The Essentials Of Corporate Cash Flow
Tune out the accounting noise and see whether a company is generating the stuff it needs to sustain itself. 
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. 
Stock Analysis
Free Cash Flow Machines
At the end of the day, its all about cash flow. If earnings can't be connected to the balance sheet, then they are less likely to create any longterm value. 
Term
Cash Flow Statement and Financial Health
A cash flow statement records the amounts of cash and cash equivalents entering and leaving a company. 
Professionals
Cash Flow Is King: How to Keep it Running
Why is cash flow so important, and what steps can a business take to improve it?

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 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 >> 
Are taxes calculated in operating cash flow?
Learn how taxes are involved with the calculations for operating cash flow, and find out about the importance of operational ... Read Answer >> 
Why do analysts look at operating cash flow?
Learn how operating cash flow is used to determine financial health. Examine how cash flow is calculated, and what a low ... Read Answer >> 
What will examining a company's cash flow from operating activities tell an investor?
Understand what examining a company's cash flow from operating activities tells an investor. Learn why the cash flow statement ... Read Answer >> 
What is the formula for calculating free cash flow in Excel?
Find out more about free cash flow, the formula for calculating free cash flow and how to calculate a company's free cash ... Read Answer >>