Calculating Free Cash Flow for Accurate Financial Analysis
Introduction Free cash flow is a key financial measure in the value relevance analysis that unveils the actual financial health of a business organization beyond the bottom line. Free cash flow is the actual net cash one has after paying for capital investments, whereas non-cash expenses are already taken into account in net income. Calculating free cash flow has become widely used, especially among investors and analysts, to analyze the company’s financial health, growth prospects, and operating efficiency. Understanding how to calculate free cash flow and interpreting its implications is…
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