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Glossary · Business quality

Free cash flow

Cash from operations minus what the company spends on equipment and buildings.

Why it matters

Profits are an accounting opinion; cash is a fact. Free cash flow pays dividends, buybacks and debt, and funds growth without borrowing.

How to read it

Free cash flow margin over 15% is excellent. Persistently negative means the company depends on outside money.

Also called: FCF

Related

ProfitabilityHow much of each sales dollar the company keeps as profit.BuybacksA company buying its own shares, so each remaining share owns more of the business.Dividend yieldYearly cash dividends per share divided by the share price.

In the Cluenex app, this explanation opens next to every free cash flow figure, with the live reading for the stock you are looking at. Open it in Cluenex