Glossary

Free cash flow (FCF) is a financial metric that represents the cash a company generates after accounting for capital expenditures (such as equipment, property, or technology investments) needed to maintain or expand its operations.

It's a key indicator of a company's financial health, as it shows the cash available for dividends, debt repayment, or reinvestment. 💼💵

For example, if a company generates $1 million in operating cash flow and spends $300,000 on capital expenditures, its free cash flow would be $700,000.

Fun fact: Free cash flow is highly valued by investors because it can reveal hidden financial strengths or weaknesses in a company that may not be immediately apparent from earnings or revenue figures. It is sometimes called the "lifeblood" of a company, as it demonstrates the company's ability to generate cash from operations. 🕵️‍♂️💧