FCF (Free Cash Flow)
Corporate Credit Analysis glossary · Financial Statement Analysis & Cash Flow Dynamics
Definition
Cash flow available to all capital providers after capital expenditures: FCF = CFO - Capex. Distinct from Free Cash Flow to Equity (which further subtracts after-tax interest).
FCF (Free Cash Flow) in plain English
Free Cash Flow is the real cash a company has left over after paying to run AND to maintain-and-grow the business — the money that's genuinely up for grabs to hand to everyone who funded the company (both lenders and shareholders). The formula is cash from operations minus capital expenditures (FCF = CFO - Capex), where 'capex' is spending on long-lived things like machines and buildings. Think of your monthly pay after you've covered living costs AND replaced your worn-out work boots — what's actually free to save or share. Note it's different from 'Free Cash Flow to Equity,' which goes one step further and also subtracts what's owed to lenders, leaving only the shareholders' slice.
Also called: Free Cash Flow
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