What is it?
Free cash flow (FCF) is the amount of money a company has left remaining after paying all of its financial obligations. Free cash flow is important to both investors and company management because it is the amount of cash that a company can use to pay dividends to shareholders, buy back stock, use for M&A and/or to make further investments in growing the company’s business.
Who is interested?
The financial community and investors.
What does it tell me?
Free cash flow is a measure of a company’s ability to expand its business and to pay returns to shareholders using only the money generated through current operations. It may also be used as an indicator of a company’s ability to obtain additional capital through financing.