FCF — Free Cash Flow

Definition

The cash a business actually generates after maintaining its asset base.

Formula

FCF = Operating cash flow - CAPEX

Worked Example

Operating cash flow $12,000/month; CAPEX $4,000/month average:

FCF = $8,000/month

Interpretation & Pitfalls

FCF is the cash-truth complement to EBITDA: EBITDA ignores CAPEX, FCF charges for it.

In TupicFinance

Cash transactions and CAPEX-tagged purchases feed an FCF view independent of accrual profit.