Free Cash Flow (FCF)

Free Cash Flow is the actual cash a company generates after paying for the expenses needed to run its business and maintain its assets. Think of it as the money left over that a company can use to pay dividends, buy back stock, or invest in growth—the stuff that actually matters to shareholders. You'll see FCF highlighted in earnings reports and analyst discussions because it's harder to manipulate than accounting profits; cash either flows in or it doesn't. For example, a retailer might report strong earnings on paper, but if it's burning through cash to stock shelves, its FCF tells the real story. Investors love FCF because it reveals whether a business is genuinely profitable or just cooking the books.