![]() ![]() The free cash flow formula is as follows:įree cash flow = Operating cash flow - Working capital changes - Capital expenditures - Dividends This is a strong indicator of the ability of an entity to remain in business, since these cash flows are needed to support operations and pay for ongoing capital expenditures. Free cash flow is the net change in cash generated by the operations of a business during a reporting period, minus cash outlays for working capital, capital expenditures, and dividends during the same period.
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