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This website is purely ACADEMIC in nature and NOT a stock market recommendation service or a tip provider. No live data or feeds are provided and all information is historic only. Information is provided for ease of understanding for the purpose of learning. Accuracy of definitions etc is not mantained. I am not a SEBI or IRDA registered.
Free Cash Flow
Free Cash Flow or FCF is a measure that is used to determine the strength in the business and the buying range for the stock.
It tells about the company's financial performance.
FCF is the surplus amount a business generates after it paying of its operating expenses and capital expenditure.
So, FCF = Operating Cash Flow - Capital Expenditures
It shows how efficient a business is in generating cash and if it can pay investors some return after funding its operations and expansions.
FCF is important because it allows a company to pursue opportunities that enhance shareholder value.
So, this can be one of the several factors we can consider for shortlisting companies.
From where can we compute FCF?
The Balance sheet is the best place from where we can get this data.
- Analysing Annual Reports of companies
- PE Ratio
- Nifty and Sensex PE
- Book Value
- Operating Profit Margin
- Earnings Per Share
- Business Fundamentals Analysis (Rule 20)
- Promoters and Shareholding Pattern (Rule 28)
- Promoter Pledging (Rule 29): What it is? And is it good or bad for the investors?
- Institutional Investors (FII and DII)(Rule 17)