Free cash flow
Free cash flow is operating cash flow less capital expenditures: the cash a business generated in a period after paying for the assets it bought.
It is not a line on any financial statement, and companies define it differently. Some subtract only purchases of property and equipment; some also subtract principal repayments on finance leases; some net proceeds from asset sales and government incentives against purchases. Two reports of the same company’s free cash flow can differ by several billion dollars.
Negative free cash flow means the quarter’s investment exceeded what the business produced. It says nothing by itself about how the gap was funded, or whether the assets will earn their cost.
How this site measures it
This site uses operating cash flow less purchases of property and equipment, both as filed. Where a company’s own definition differs, as Amazon’s does, its figure is shown in a labelled release column and never mixed into the series.
Questions this page answers
- Can a profitable company have negative free cash flow?
- Yes, and in a build-out it is common. Profit recognises an asset’s cost over its life through depreciation; cash pays for it up front.
- Is negative free cash flow bad?
- It is a fact about timing. Whether it is a problem depends on the return the assets earn, and that shows up in later quarters’ operating cash flow, not in the quarter of the spend.
Where it is used
Every company page states it, for example Microsoft, Alphabet, Amazon, Meta, Oracle, and the companies page sorts all twenty-one. It decides the questions spending above cash flow and debt-funded spending.
Related terms: Capital expenditures (capex), Operating cash flow, Long-term debt.