What is Free Cash Flow?
Free Cash Flow
Free Cash Flow (FCF) is the cash generated by a startup's operations minus capital expenditures, representing cash available for debt repayment or expansion.
Why It Matters for Startups
Serves as a vital financial metric for unit economics and investor reporting; tracking Free Cash Flow helps founders manage cash runway and growth efficiency during operational flexibility analysis and growth capitalization planning.
Detailed Deep Dive
Free Cash Flow (FCF) measures the surplus cash generated from operations after subtracting capital investments, serving as a primary metric for corporate valuation.
Frequently Asked Questions
Q:What is the formula for Free Cash Flow?
FCF = Operating Cash Flow - Capital Expenditures (CapEx).
Q:Why is FCF important for exits?
Acquirers value companies based on their FCF generation capacity, as it indicates the cash yield of the business.
Quick Facts
- CategoryMetrics
- Key ApplicationOperational flexibility analysis and growth capitalization planning
Coverage Trend12 Weeks
Related Startup Terms
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Free Cash Flow Media Coverage & Intelligence
Meta's AI Bill Swallows Nearly All of Its Free Cash Flow as Profit Falls 14%
Meta Platforms Inc.'s shares fell more than 8% in after-hours trading today after the social networking company beat revenue expectations for its fiscal 2026 second quarter but missed badly on earnings as costs rose 55%.