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The cash a company generates from operations after accounting for capital expenditures needed to maintain or expand its asset base.
Free cash flow is calculated as operating cash flow minus capital expenditures. It represents the money available for dividends, share buybacks, debt repayment, or reinvestment. A company earning $10M in operating cash flow and spending $3M on capital expenditures has $7M in free cash flow. Positive and growing free cash flow is a strong indicator of financial health. The price-to-FCF ratio is considered by many value investors to be more reliable than the P/E ratio because cash flow is harder to manipulate through accounting choices than earnings.