|
|
Dictionary definition: free cash flow
- Article from:
- A Dictionary of Business and Management
Copyright© A Dictionary of Business and Management 2006, originally published by Oxford University Press 2006. (Hide copyright information)
|
free cash flow
A measure of the cash that a company is generating or consuming. Free cash flow is often defined as after-tax
operating profit
less net
capital expenditure
:free cash flow = revenues – operating expenses + depreciation – taxes – capital expenditure costs
However, there is no precise definition of free cash flow: another equation might include changes in
working capital
. Making comparisons between companies on this basis is not very useful if they are using different definitions. Free cash flow is ...