Free Cash Flow For The Firm - FCFF

AAA

DEFINITION of 'Free Cash Flow For The Firm - FCFF'

A measure of financial performance that expresses the net amount of cash that is generated for the firm, consisting of expenses, taxes and changes in net working capital and investments.

Calculated as:

Free Cash Flow For The Firm (FCFF)



INVESTOPEDIA EXPLAINS 'Free Cash Flow For The Firm - FCFF'

This is a measurement of a company's profitability after all expenses and reinvestments. It's one of the many benchmarks used to compare and analyze financial health.

A positive value would indicate that the firm has cash left after expenses. A negative value, on the other hand, would indicate that the firm has not generated enough revenue to cover its costs and investment activities. In that instance, an investor should dig deeper to assess why this is happening - it could be a sign that the company may have some deeper problems.

VIDEO

RELATED TERMS
  1. Working Capital

    This ratio indicates whether a company has enough short term ...
  2. Unlevered Free Cash Flow - UFCF

    A company's cash flow before interest payments are taken into ...
  3. Financial Accounting

    The process of recording, summarizing and reporting the myriad ...
  4. Free Cash Flow Per Share

    A measure of a company's financial flexibility that is determined ...
  5. Investment

    An asset or item that is purchased with the hope that it will ...
  6. Operating Cash Flow - OCF

    In accounting, a measure of the amount of cash generated by a ...
Related Articles
  1. A Clear Look At EBITDA
    Markets

    A Clear Look At EBITDA

  2. The Essentials Of Corporate Cash Flow ...
    Retirement

    The Essentials Of Corporate Cash Flow ...

  3. What Is A Cash Flow Statement?
    Markets

    What Is A Cash Flow Statement?

  4. Free Cash Flow: Free, But Not Always ...
    Markets

    Free Cash Flow: Free, But Not Always ...

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center