Free Cash Flow (FCF)
Free cash flow is the cash a business generates after paying its operating costs and the capital spending needed to maintain and grow its assets.
What is Free Cash Flow (FCF)?
Analysts derive it by taking earnings, adding back non-cash charges such as depreciation and amortisation, and deducting increases in working capital and capital expenditure. Because it reflects real cash, it is harder to manipulate than EBITDA, and discounted free cash flows are the basis of most company valuations.