Free cash flow (FCF)

Free cash flow (FCF) comprises all cash and cash equivalents that are freely available to the company at the end of a financial period.

What’s it all about?

  • What is free cash flow?
  • How is free cash flow calculated?

Free cash flow (FCF) includes all liquid funds that are freely available to the company after the end of an accounting period. The company can use these for debt repayments, dividend distributions, investments, company acquisitions or share buybacks.

What role does FCF play in investment decisions?

The FCF value shows whether the company can maintain financial stability. So as a key financial figure, it is especially important for long-term considerations. FCF is an instrument for investment decisions because it shows whether the financial capacity exists for the repayment of loans and the distribution of dividends.

How is free cash flow calculated?

Free cash flow is the difference between operating cash flow and cash flow from investing activities (net payments for investments in property, plant and equipment). FCF is made up of the cash flow from the commercial activities of continuing operations. Divestments are added to this, while investments (excluding financial investments), lease payments, paid net interest and other borrowing costs are deducted. So the FCF is derived from the cash flow statement.

 

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Overcoming financial challenges

Here, 2 Italian restaurateurs speak frankly about financial challenges – and how METRO has helped them.

Two Italian restaurateurs with commercial expertise speak frankly about why it’s important to guarantee constant cash flow despite everyday problems.