Free Cash Flow

Free Cash flow is a way of measuring financial performance calculated as operating income minus capital expenses. Free cash flow (FCF) represents the money that a company can generate after laying out the money necessary to maintain or develop its asset. Free cash flow is significant because it allows a corporation to pursue chances that enhance shareholder price. FCF is worked out as: EBIT(1-Tax Rate) + Depreciation and Amortization – Change in Web Working Capital – Capital Expenditure.