Q: How do you calculate free cash flow? I've heard of a lot of different definitions, is there a standard definition for free cash flow (FCF) that people use?
A:Free Cash Flow (FCF) is generally defined as GAAP Operating Cash Flow (OCF, found in your GAAP accounting cash flow statement) less Capital Expenditures (CapEx). This will include the cash generated by the operations of the business (net of taxes, interest payments etc.) less the needed cash outlays to maintain or grow the business (Capex). It provides a glimpse of the run rate cash available to shareholders (though depending on the legal structure, shareholders can be taxed on the cash if they try to extract it out of the business)
Source: www.explainbusiness.com
