Ever heard the term Free Cash Flow and wondered what it meant? No, it’s not cash for free. It’s just plain old operating cash flow minus any cash used for capital expenses. Why is this important? Well, from an investment perspective many feel that it’s a better metric than earnings, because earnings can be clouded based on accounting treatments.
For the average business person, FCF is the money available to pursue other opportunities to expand your business. Open another store, design another product, hire another sales person – while still maintaining your existing business and assets. You get the picture.