What Is Free Cash Flow?

Free cash flow (FCF) refers to the cash a company generates after accounting for capital expenditures.

Why Free Cash Flow Matters to Investors

Investors use free cash flow to evaluate a company’s ability to sustain operations, invest in growth, and return capital.

How Free Cash Flow Is Used in Stock Analysis

• Assessing business sustainability
• Comparing companies within the same industry

Common Misunderstandings

Free cash flow is often confused with net income, but they measure different aspects of financial performance.

Summary

Understanding free cash flow helps investors make more informed long-term decisions.