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Free Cash Flow: Why It Matters More Than Net Income

Beginner Investing • 5 min

Net income can be influenced by accounting choices, unlike real cash. Free Cash Flow (FCF) gives you a clearer picture. It’s the cash left after a company covers its running and growth costs, known as capital expenditures. The formula? Cash flow from operations minus capital expenditures.A company might show profits on paper but still be draining cash. Or it could be the other way around. FCF reveals which scenario…

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