What is free cash flow (FCF)?

Updated November 15, 2026 · examples use today’s data

Free cash flow is the cash a company has left after paying for its operations and its investments in equipment and buildings: operating cash flow minus capital expenditure. It is the money that can pay dividends, buy back shares or reduce debt.

A real example

Apple generated $136.1 billion of free cash flow in its last fiscal year. Its price-to-free-cash-flow ratio is about 38.1.

Why it matters

Earnings include accounting choices; cash is harder to fake. A company that reports rising profits but negative free cash flow for years deserves a closer look.

Watch for

Stock-based compensation is added back in operating cash flow even though it dilutes shareholders, and companies can delay investment to make one year's FCF look strong. Look at several years, not one.

Frequently asked questions

What is FCF yield?

Free cash flow divided by market cap. A 5% FCF yield means the business produces $5 of free cash for every $100 of market value.

Can a profitable company have negative FCF?

Yes, when it invests heavily or ties up cash in inventory and receivables while growing.

Tools for this

DCF calculator Stock screener

Keep learning

What is the P/E ratio and how do you use it?What is earnings per share (EPS)?What does TTM (trailing twelve months) mean?What is an ETF and how is it different from a stock?What is a dividend and what is dividend yield?What is compound interest and why does it matter so much?

Educational content, not investment advice. Figures in the examples come from company filings and market prices and update automatically.