Fundamentals & valuation
What is Free cash flow?
Hinglish mein padhein: Free cash flow kya hota hai?
Free cash flow is operating cash flow minus capital expenditure — the cash a business generates after investing to maintain and grow.
Profits can be shaped by accounting choices; cash is harder to fake. Companies with steady free cash flow can pay dividends, cut debt or buy back shares.
Growing companies may have negative free cash flow for a while because they are investing heavily.
Related terms
- Net profitNet profit (profit after tax) is what is left from revenue after all expenses, interest, depreciation and taxes.
- DividendA dividend is a share of profit paid to shareholders in cash. Dividend yield is the yearly dividend divided by the share price.
- Share buybackA buyback is when a company repurchases its own shares from shareholders, usually at a premium, reducing the number of shares outstanding.