Financial Analysis
Free Cash Flow
Cash generated by business operations minus capital expenditures required to maintain the business, representing the amount available to service debt, pay distributions, or reinvest.
Cash generated by operations minus capital expenditures required to maintain the business. Represents the cash actually available to service debt, take owner distributions, or fund reinvestment, after accounting for the spending necessary to sustain current productive capacity. Distinguished from net income and EBITDA by its treatment of actual cash outflows for maintenance capital. Commonly used in debt service coverage analysis and discounted cash flow valuation. (Also see EBITDA, SDE, DSCR, DCF.)