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Article: Free cash flow means flexibility; It provides firms the opportunity to build their business or finance acquisitions.(Adviser's Bookshelf)(Reprint)
- Article from:
- Investment News
- Article date:
- February 25, 2008
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Copyright informationCOPYRIGHT 2008 Crain Communications, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Byline: Louis Navellier
From 2004 to 2007, the very best stocks ranked by production of free cash flow outperformed the universe of stocks by 59%.
Free cash flow is the money that a company has left after paying the cost of doing business and the upkeep and maintenance needed to stay in business. In simple accounting terms, free cash equals operating earnings minus the capital expenditures needed to run the business.
To understand free cash flow, think about your paycheck. You get paid a certain amount, and from that amount, expenses such as state and federal income tax, health insurance, Social Security, 401(k) contributions and such are deducted.
What is ...