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.
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
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