Definition · cash flow
Free cash flow
Free cash flow is the cash a company generates after operating expenses and capital expenditures, often used to assess financial flexibility and value creation. For free cash flow, the useful boundary is the cash source, timing horizon, owner, liquidity exposure, and decision before options narrow.
Also known as FCF
Why it matters
Understanding free cash flow matters because cash decisions are time-sensitive. Teams need to know when money moves, which balance changes, who owns the next action, and what can still be changed before liquidity tightens. Pluvo computes free cash flow from connected operating and capital-expenditure data and shows which drivers changed it period over period, with each figure traceable to source.
In practice
Liquidity example
Finance teams use free cash flow when they need to understand cash timing before a decision is made. A team might compare expected receipts, payroll, vendor payments, and debt obligations to decide what action is needed this week.
Pluvo example
Pluvo computes free cash flow from connected operating and capital-expenditure data and shows which drivers changed it period over period, with each figure traceable to source.
In practice, teams should define free cash flow with a clear source, owner, time period, and decision before they use it in reporting, planning, or operating reviews.
Understanding free cash flow matters because cash decisions are time-sensitive. Teams need to know when money moves, which balance changes, who owns the next action, and what can still be changed before liquidity tightens. Pluvo computes free cash flow from connected operating and capital-expenditure data and shows which drivers changed it period over period, with each figure traceable to source.
A strong workflow for free cash flow separates the definition from the action: first agree what the term means, then decide how it is measured, when it changes, and who is accountable for the next step.
Pluvo computes free cash flow from connected operating and capital-expenditure data and shows which drivers changed it period over period, with each figure traceable to source.
FAQ
What is free cash flow?
Free cash flow is the cash a company generates after operating expenses and capital expenditures, often used to assess financial flexibility and value creation. For free cash flow, the useful boundary is the cash source, timing horizon, owner, liquidity exposure, and decision before options narrow.
How do you calculate free cash flow?
To calculate free cash flow, define the source data, time period, comparison basis, and owner before applying the formula. The useful answer is not only the math; it is whether the inputs and timing match the decision the metric supports.
What is the difference between free cash flow and operating cash flow?
The boundary for free cash flow differs from related terms by scope, source data, time period, and decision use. In this glossary, it covers what free cash flow is, the operating-cash-flow-minus-capex formula, and how it differs from operating cash flow and the levered and unlevered variants, so teams should compare those boundaries before using it in reporting or planning.
Sources
- Free Cash Flow (FCF): How to Calculate and Interpret It Investopedia https://www.investopedia.com › ... › Financialinvestopedia.com
- Free Cash Flow (FCF) - Formula, Calculation, & Uses Corporate Finance Institute https://corporatefinanceinstitute.comcorporatefinanceinstitute.com
- Free cash flow Wikipedia https://en.wikipedia.org › wiki › Free_cash_flowen.wikipedia.org