Glossary · from the DESK dictionary
Free Cash Flow
The cash flow available to a company after subtracting the capital expenditures necessary to maintain or expand its asset base.
In plain words
Considered by many investors more meaningful than pure accounting profit, since it is harder to manipulate.
Formula
FCF = Operating cash flow − Capital expenditures (CapEx)
Shows how much real cash a company actually generates that is available for dividends, buybacks, or debt reduction.
What it means for traders
An absolutely central metric in fundamental analysis and company valuation.
Common pitfalls
Can fluctuate significantly year to year due to lumpy large capital expenditures.
Related terms
Discretionary Cash Flow · Free Cash Flow Margin · Free Cash Flow per Share · Free Cash Flow to Equity (FCFE) · Free Cash Flow to Firm (FCFF) · Free Cash Flow Yield · Net Operating Profit After Tax (NOPAT) · Operating Cash Flow
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.