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Hub AI
Free cash flow AI simulator
(@Free cash flow_simulator)
Hub AI
Free cash flow AI simulator
(@Free cash flow_simulator)
Free cash flow
In financial accounting, free cash flow (FCF) or free cash flow to firm (FCFF) is the amount by which a business's operating cash flow exceeds its working capital needs and expenditures on fixed assets (known as capital expenditures). It is that portion of cash flow that can be extracted from a company and distributed to creditors and securities holders without causing issues in its operations. As such, it is an indicator of a company's financial flexibility and is of interest to holders of the company's equity, debt, preferred stock and convertible securities, as well as potential lenders and investors.
Free cash flow can be calculated in various ways, depending on audience and available data. A common measure is to take the earnings before interest and taxes, add depreciation and amortization, and then subtract taxes, changes in working capital and capital expenditure. Depending on the audience, a number of refinements and adjustments may also be made to try to eliminate distortions.
Free cash flow may be different from net income, as free cash flow takes into account the purchase of capital goods and changes in working capital and excludes non-cash items.
Free cash flow is a non-GAAP measure of performance. As such, there are many ways to calculate free cash flow. Below is one common method for calculating free cash flow:
Note that the first three lines above are calculated on the standard statement of cash flows.
When net profit and tax rate applicable are given, you can also calculate it by taking:
where
When Profit After Tax and Debt/Equity ratio are available:
Free cash flow
In financial accounting, free cash flow (FCF) or free cash flow to firm (FCFF) is the amount by which a business's operating cash flow exceeds its working capital needs and expenditures on fixed assets (known as capital expenditures). It is that portion of cash flow that can be extracted from a company and distributed to creditors and securities holders without causing issues in its operations. As such, it is an indicator of a company's financial flexibility and is of interest to holders of the company's equity, debt, preferred stock and convertible securities, as well as potential lenders and investors.
Free cash flow can be calculated in various ways, depending on audience and available data. A common measure is to take the earnings before interest and taxes, add depreciation and amortization, and then subtract taxes, changes in working capital and capital expenditure. Depending on the audience, a number of refinements and adjustments may also be made to try to eliminate distortions.
Free cash flow may be different from net income, as free cash flow takes into account the purchase of capital goods and changes in working capital and excludes non-cash items.
Free cash flow is a non-GAAP measure of performance. As such, there are many ways to calculate free cash flow. Below is one common method for calculating free cash flow:
Note that the first three lines above are calculated on the standard statement of cash flows.
When net profit and tax rate applicable are given, you can also calculate it by taking:
where
When Profit After Tax and Debt/Equity ratio are available: