free cash flow (FCF)

definition

A measure of a company's financial strength, as measured by the amount of money it has left after paying its bills. Calculated by subtracting capital expenditures and dividends from cash flow from operations. A company can have a negative free cash flow if it is reinvesting its excess cash, so it bears examining whether a low (or negative) free cash flow number is caused by growth or an underlying financial weakness. See Cash Flow; Cash Flow Statement.