Free cash flow: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson m (Spacing 27/8/13) |
imported>Doug Williamson m (Amend to (1) Note that not all practitioners mean the same thing by Free cash flow; (2) Emphasise that it normally includes a DEDUCTION for net capex.) |
||
| Line 3: | Line 3: | ||
The net figure obtained by deducting from cash generated by operations - or by an investment - that cash which has been absorbed by operations or by the investment. | The net figure obtained by deducting from cash generated by operations - or by an investment - that cash which has been absorbed by operations or by the investment. | ||
Free cash flow disregards all cash flows to do with financing. | Free cash flow normally disregards all cash flows to do with financing. | ||
A very important component of free cash flow is a deduction for net capital expenditure (capex). | |||
The capital base of any ongoing business must be maintained, in order for the business to be sustainable. The deduction for capex within the free cash flow calculation identifies and quantifies this essential cash outflow. | |||
== See also == | == See also == | ||
* [[Cashflow]] | * [[Cashflow]] | ||
* [[Capital expenditure]] | |||
* [[FCF]] | * [[FCF]] | ||
Revision as of 12:04, 28 August 2014
(FCF).
The net figure obtained by deducting from cash generated by operations - or by an investment - that cash which has been absorbed by operations or by the investment.
Free cash flow normally disregards all cash flows to do with financing.
A very important component of free cash flow is a deduction for net capital expenditure (capex).
The capital base of any ongoing business must be maintained, in order for the business to be sustainable. The deduction for capex within the free cash flow calculation identifies and quantifies this essential cash outflow.
