Free cash flow: Difference between revisions
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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.) |
imported>Doug Williamson (Add link.) |
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* [[Capital expenditure]] | * [[Capital expenditure]] | ||
* [[FCF]] | * [[FCF]] | ||
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Revision as of 19:03, 12 February 2017
(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.
