TL;DR
Free cash flow (FCF) is the amount remaining after subtracting capital expenditures from a company's annual cash flow. For instance, if a company's annual cash flow is 10 million TL and capital expenditures are 2 million TL, the FCF would be 8 million TL.
9 min readWhat is free cash flow? Difference from profit, calculation method, and FCF analysis for BIST companies.
Free Cash Flow (FCF) Analysis
This metric is a key component of fundamental analysis. It should be evaluated alongside the P/E ratio and P/B ratio.
How to Calculate
See our financial statement analysis guide for calculation details. Stock valuation methods use this metric alongside other measures.
Application on BIST
Filter by this metric in Borsafolio's stock screener. Each stock detail page provides quarterly financials and comparative metrics.
Screen BIST stocks by financial metrics.
Open Stock Screener →Related articles: Fundamental Analysis Guide, P/E Ratio, P/B Ratio, Financial Statements.
Frequently Asked Questions
What is free cash flow (FCF)?
Free cash flow (FCF) is the amount remaining after subtracting capital expenditures from a company's cash flow generated from operations. It is important for assessing a company's growth potential and ability to meet its debts.
How is FCF calculated?
FCF can be calculated using two main methods: direct and indirect. For instance, if net income is 10 million TL, depreciation is 1 million TL, and capital expenditure is 2 million TL, the FCF calculated using the indirect method would be: 10 + 1 - 2 = 9 million TL.
Why is free cash flow (FCF) important?
FCF indicates a company's financial health and future growth potential. For investors, high FCF increases the amount of cash available for dividend payments and debt repayments.
What is the relationship between FCF and other financial indicators?
FCF is directly related to many financial indicators. For example, companies with high FCF values typically carry lower debt risk and are more resilient to market fluctuations.
What is the role of FCF in the cash flow statement?
FCF is calculated by subtracting capital expenditures from cash flows generated from operating activities in the cash flow statement. This helps investors assess the company's future growth opportunities.
This content does not constitute investment advice. Past performance is not a guarantee of future results. Make your investment decisions based on your own risk profile.
