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The cash that a company is able
to generate after spending the
money required to run or
expand it’s business
Free Cash Flow - FCF
is calculated
Operating cash flow
Capital expenditures
Free cash flow
Free Cash Flow - FCF
EBay
Financial statement 2006
…………………..
…………………..
……………….
$ 2.24 billion
Free Cash Flow - FCF
$ 2.24 billion
Change in net working capital
Capital expenditures (property,
equipment, and net current assets )
$0.51 billion
$1.73 billion (free cash flow)
Free Cash Flow - FCF
Usages of $1.73 billion (free cash flow)
Foy paying debt
=> google
For investing
buy back stock,
use it toward a regular cash dividend,
grow business
Discussion
 Free cash flow is often considered a more
reliable measure of a company’s income than
reported earnings. What are some
possible ways that corporate
accountants might be able to change their
earnings to portray a more favorable
earnings statement?