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Free Cash Flow

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updated 13 Jan 2023

Free cash flow (FCF) is a measure of a company's financial performance that represents the cash it generates after accounting for capital expenditures. It is calculated as operating cash flow minus capital expenditures.

Why it Matters

FCF is important because it shows a company's ability to generate cash after spending money on growth and is a measure of a company's ability to pay dividends or make acquisitions. A positive FCF indicates that a company has enough cash to fund its operations, pay dividends and reinvest in the business. A negative FCF indicates that a company may have difficulty paying dividends or making acquisitions.