Free Cash Flow — the Number That's Hard to Fake

FCF = operating cash flow minus capex: the cash left after running AND maintaining the business. Profits are opinion; cash is fact.

Level by level

Beginner

A company can report profits for years while cash drains away (unpaid receivables, endless capex). FCF exposes that.

Intermediate

FCF yield (FCF divided by market cap) is a cleaner cheapness lens than P/E; consistent FCF funds dividends, buybacks and debt cuts without dilution.

Advanced

Divergence between net income and FCF over multiple years is the classic earnings-quality alarm (accruals). Watch the capex split: maintenance sustains, growth capex should show up later as revenue.

Common mistakes

• Trusting profits while receivables balloon
• Punishing growth capex as if it were waste

Practise & tools

• Free calculators & trading journal
• Structured lessons in the Learning Hub
• Daily Chart Challenge

_Educational content only — not financial advice. Historical behaviour never guarantees future results._