Free Cash Flow

Free cash flow is the cash a company generates from its normal business operations, minus what it spends on capital expenditures like equipment and property. It's a different, often more trusted number than reported profit, since profit can be shaped by accounting choices in ways cash flow can't be as easily: a company can show a profit on paper while actually burning through cash, or vice versa. Investors watch free cash flow closely because it's the money genuinely available to pay dividends, buy back stock, pay down debt, or reinvest in growth.