Free Cash Flow
Operating cash flow minus capital expenditures.
What is Free Cash Flow?
The cash left over after the business funds itself - available for dividends, buybacks, debt repayment, or acquisitions. Harder to manipulate than reported earnings, which is why analysts often prefer it.
Free Cash Flow: a worked example
$500M from operations minus $150M capex is $350M free cash flow.
More terms in Valuation & Analysis
Market Capitalization
Share price times shares outstanding - the equity value of a company.
Earnings Per Share (EPS)
Net income attributable to each share of common stock.
Price-to-Earnings (P/E) Ratio
Price per share divided by earnings per share.
Dividend Yield
Annual dividends per share divided by share price.
Payout Ratio
The share of earnings paid out as dividends.
Book Value
Assets minus liabilities - the accounting value of equity.
EBITDA
Earnings before interest, taxes, depreciation, and amortization.
Return on Equity (ROE)
Net income divided by shareholders' equity.