Ratios: Free Cash Flow definitions Flashcards
Ratios: Free Cash Flow definitions
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Free Cash Flow Amount of cash generated from core operations after subtracting capital expenditures and possibly dividends. Cash from Operating Activities Cash generated by a company's main business activities, found in the operating section of the statement of cash flows. Capital Expenditures Spending on long-term assets like machinery or buildings, necessary for maintaining or expanding operations. Dividends Payments made to shareholders, often deducted from cash generated to determine funds available for other uses. Statement of Cash Flows Financial report detailing cash inflows and outflows, divided into operating, investing, and financing sections. Operating Activities Core business functions that generate cash, such as selling products or providing services. Investing Activities Section of the cash flow statement showing cash used for or received from buying and selling long-term assets. Financing Activities Cash flows related to borrowing, repaying debt, or transactions with shareholders, such as issuing stock or paying dividends. Fixed Assets Long-term tangible resources like equipment or buildings, essential for business operations and expansion. Net Income Accounting profit after all expenses, distinct from cash flow as it includes non-cash items. Cash Perspective Analytical focus on actual cash inflows and outflows rather than accounting profits. Negative Free Cash Flow Situation where cash from operations is insufficient to cover capital expenditures and dividends, possibly due to high investment or low cash generation. Sustainable Cash Generation Ability to consistently produce cash from core business activities without relying on external financing. Financial Health Overall condition of a company’s finances, often assessed by its ability to generate and manage cash. Cash-Generating Power Capacity of a business to produce cash from its main operations, crucial for funding growth and obligations.
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