FREE CASH FLOW Definition

Bookmark and Share

FREE CASH FLOW is net income plus non-cash charges to income, specifically depreciation and amortization less capital expenditures, to sustain the basic business. Free cash flow per share is a measure of the amount of cash per share a business generates after expenditures for equipment or buildings. Free cash flow is available to be used for expansion, dividends, reduction in debt, or other purposes. Free cash flow is valued more than just about any other measure, including earnings (EPS). Cash assists companies to expand, develop new products, stock buy back, pay dividends, or reduce debt. Many analysts focus on free cash flow for insight into the core of a company's cash-generating engine.

Learn new Accounting Terms

SUBSIDIARY is a company whose voting stock is more that 50% owned by another company.

ACCOUNT DISTRIBUTION is the process by which debits and credits are identified to the correct accounts.

Suggest a Term

Enter Search Term

Enter a term, then click the entry you would like to view.