26 November 2009
Free Cash Flows, in general means the amount of cash, that a company is left with after meeting all it's cash expenses, including capital expenditures / Investments. In other word, we can say uncommitted cash flows. FCF = Net Income as per P/L A/c + depreciation or non cash exp + amortization - /+ changes in working capital - Capital Expenditure.
Therefore, it is a cash not required for operations or further reinvestments.
USE of FCF - It is used to judge the company performance. However, now a days EVA is more preferred on FCF to judge the company performance.
CAclubindia
