Finance and accounting
Free cash flow
Cash from operations minus capital expenditure.
Last reviewedWhat does Free cash flow mean?
Free cash flow is the cash a business generates from its operations minus what it spends on capex. It is the cash available to pay lenders and owners or to reinvest. Unlike EBITDA, it takes account of capex and changes in working capital.
Where does it come up in case interview prep?
- A light balance sheet, and why profit is not cashLesson in Business basics for non-business learners
- Subscriber and content economicsLesson in Media, streaming, gaming, and advertising
- LBO returns and fund economicsLesson in Private equity and venture capital
- SaaS unit economics: ARR bridge, NRR, CAC payback, and rule of 40Lesson in Software and SaaS
- Telecom unit economics: fiber roll-out, churn, and capexLesson in Telecom: mobile and fixed networks
Related terms
- Capex (capital expenditure)Spending on long-lived assets such as machines and buildings.
- Working capitalCash tied up in running the business day to day.
- EBITDAEarnings before interest, taxes, depreciation and amortization.
- DCF (discounted cash flow)Valuing a business from the future cash it will generate.
- ProfitThe money left over after costs. Revenue minus cost.
- RevenueMoney earned from sales, before costs.
- CostWhat it takes to make and sell the product in a period.
- Fixed costA cost that stays the same when volume changes, within a normal range.