Free cash flow (FCF)

Also called: free cash flow, cash generation

The cash the business generates after paying to keep and grow its equipment and buildings. It's what's available for dividends, buybacks, paying down debt or acquisitions.

Formula

FCF = Cash from operations − Capital expenditure

Worked example

1. Cash from operations = $2.2bn
2. − Capital expenditure = $700m

Result: $1.5bn

How to read it

Positive and growing FCF is one of the clearest signs of a healthy business. This is the figure the DCF calculator is built on.

Worked example uses made-up figures for 'Example plc'

See it with real numbers: Any company page → (free account)