Cash flow
Free Cash Flow
Free cash flow is the cash a business generates after the spending required to maintain and grow its asset base.
Profit is an opinion formatted by accounting rules. Free cash flow is closer to the surplus. Start with cash from operations on the cash-flow statement, subtract capital expenditure, and you have a practical free-cash-flow figure. That surplus can fund dividends, buybacks, debt paydown, or more investment.
One year is not a pattern. Working-capital swings and a single plant build can make a great business look cash-poor, or a stalling one look flush. Read free cash flow over several years beside net income. A persistent gap, with earnings high and cash low, is a reason to slow down.
Formula
Free cash flow ≈ cash from operations − capital expenditure
Live example
Apple Inc. (AAPL) last printed at $345.33 with a market cap of $5.04T. Apply the formula on this page to that live price. Where the quote is missing an input, the stock page's financials are the next place to read it.
Related
Free Cash Flow Yield · Price to Free Cash Flow · Discounted Cash Flow (DCF)
See it on a list: best stocks · screener
Questions
Is free cash flow the same as owner earnings?
They are cousins. Owner earnings, in Buffett's sense, also adjust for the maintenance spending a business truly needs, which may differ from reported capex.
Where do I see it on Stocklytics?
Open a stock and the financials. Cash-flow lines and free-cash-flow yield in the score breakdown are the live views of the same idea.