easy · Debt Capital Markets credit-ratings-risk
Free Cash Flow (FCF) is considered more critical for credit analysis than accounting earnings because FCF represents:
- The cash flow a company receives from selling newly issued equity to the public.
- Earnings before interest, taxes, depreciation, and amortization are deducted.
- The actual cash available to service and repay debt after necessary capital expenditures.
- The total amount of idle cash the company currently holds across its various bank accounts.
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