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CA Ravi Sisodia

CA Ravi Sisodia (Querist)
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26 November 2009 what the meaning of Free Cash Flow ?
How to use FCF ?

CA. Rishabh Mittal

CA. Rishabh Mittal (Expert)
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26 November 2009 Free Cash Flows, in general means the amount of cash, that a company is left with after meeting all it's cash expenses, including capital expenditures / Investments. In other word, we can say uncommitted cash flows.
FCF = Net Income as per P/L A/c + depreciation or non cash exp + amortization - /+ changes in working capital - Capital Expenditure.

Therefore, it is a cash not required for operations or further reinvestments.

USE of FCF - It is used to judge the company performance. However, now a days EVA is more preferred on FCF to judge the company performance.

CA Ravi Sisodia

CA Ravi Sisodia (Querist)
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26 November 2009 THANKS DEAR RISHABH

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