Free Cash Flow (FCF) is cash generated by operations minus capital expenditures — the cash a company can use for dividends, buybacks, acquisitions, or debt paydown. FCF is arguably the most important financial metric because it represents real, distributable wealth — unlike accounting earnings, which can be manipulated. FCF yield (FCF / market cap) of 5%+ is generally attractive. Growing FCF signals business strength; declining FCF despite growing earnings is a warning sign of unsustainable accounting. Public companies disclose FCF in earnings releases and investor presentations. Berkshire Hathaway's 'owner earnings' is a closely related concept.
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Free Cash Flow
August 22, 2026 · Aditya Gupta
Investing
Related terms
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A 401(k) is an employer-sponsored retirement plan where employees contribute pre-tax salary that grows tax-deferred until withdrawal. The…
Active Management
Active management is the attempt to outperform a benchmark through stock selection, sector rotation, market timing, or any…
Alpha
Alpha is excess return relative to a benchmark, adjusted for risk (beta). Positive alpha means an investment outperformed…
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Asset allocation is the percentage split of your portfolio across asset classes — typically stocks, bonds, and cash,…
Backdoor Roth
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