Learn / Glossary / Free cash flow
GlossaryWhat is Free cash flow?
Free cash flow is the cash a company has left after paying to run and grow the business.
The simple explanation
It is the cash from operations minus spending on equipment and buildings. Free cash flow can be used to pay dividends, buy back shares, pay down debt or invest in new projects.
An example
A company earns 10 billion in cash and spends 3 billion on factories. Its free cash flow is 7 billion.
Why it matters
It is harder to fake than profit, so many investors watch it closely.
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Educational information, not financial advice.