Trailing FCF

DEFINITION of 'Trailing FCF'

A company's free cash flow for the previous 12 months. Trailing FCF is used by investment analysts in calculating a company's free cash flow yield. Trailing FCF is important to investors because it shows how much money a company has brought in over the last year, after subtracting capital expenditures.

BREAKING DOWN 'Trailing FCF'

The more free cash flow a company has, the more easily it can pay its creditors and investors and reinvest in itself. A strong trailing free cash flow multiple can be a sign that a stock is a good investment when combined with other signs of financial strength, such as increasing revenues, order and sales growth, controlled SG&A costs, increasing gross profits and solid earnings per share.