The cash generated by a company's operations after accounting for capital expenditures needed to maintain or expand its asset base. It represents the actual cash available to shareholders, creditors, and for reinvestment.
From Old English 'freo' (not in bondage) and Old French 'cache' (to hide). The modern financial concept developed in the 1980s as investors sought better measures of a company's true cash-generating ability beyond accounting profits.
Free cash flow is often called the 'purest' measure of a company's financial performance because it's much harder to manipulate than earnings - you either have the cash or you don't. Warren Buffett famously focuses on this metric over reported profits!
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