4 min Read Dec 1, 2022
Free Cash Flow (FCF) is the cash a company generates from its operations after accounting for capital expenditures (CapEx) required to maintain or expand its asset base. It is calculated as: FCF = Operating Cash Flow – Capital Expenditure. FCF is often considered a purer measure of financial health than reported earnings, as it reflects the actual cash available to reward shareholders through dividends, buybacks, or debt repayment. Companies with consistently high and growing FCF are typically favoured by value and quality investors.
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