Free cash flow (FCF) is the cash left over after a company pays for its operating expenses and capital expenditures.
Free cash flow is important because it allows a company to pursue opportunities that enhance shareholder value.
Formula to calculate free cash flow.
A company named Scorpion Limited which deal with organic vegetables have a capital expenditure of $300 and operating cash flow $1,200. Calculate the Free cash flow for the company.
Thus, the free cash flow of the company is $ 900.