Free Cash Flow Per Share

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DEFINITION of 'Free Cash Flow Per Share'

A measure of a company's financial flexibility that is determined by dividing free cash flow by the total number of shares outstanding. This measure serves as a proxy for measuring changes in earnings per share.

Calculated as:

Free Cash Flow Per Share

INVESTOPEDIA EXPLAINS'Free Cash Flow Per Share'

This measure signals a company's ability to pay debt, pay dividends, buy back stock and facilitate the growth of business. Also, the free cash flow per share can be used to give a preliminary prediction concerning future share prices. For example, when a firm's share price is low and free cash flow is on the rise, the odds are good that earnings and share value will soon be on the up, because a high cash flow per share value means that earnings per share should potentially be high as well.

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