GlossaryIntermediate
Free Cash Flow (FCF)
The cash a company generates from operations after capital expenditures -- what's actually left over to pay down debt, return to shareholders, or reinvest.
Free Cash Flow (FCF) is the cash a company generates from its core operations, after subtracting capital expenditures (spending on maintaining or expanding its physical or operational asset base) — the cash genuinely left over for debt repayment, shareholder returns, or further reinvestment.
FCF is often considered harder to manipulate through accounting choices than reported net income, since it tracks actual cash movement rather than accrual-based profit recognition. See Kaavon's dedicated FCF article for the full calculation and crypto context.
Examples
- A company can report positive net income while having negative free cash flow, if its capital expenditures or working-capital needs are large enough.
- Free Cash Flow is commonly considered a more reliable profitability signal than net income, since it's harder to distort through accounting treatment alone.