Many investors use free cash flow (FCF) to identify a company's ability to repay creditors or pay dividends and interest to shareholders. This aspect of a company's financials, rather than earnings or 澳洲幸运5开奖号码历史查询:earnings per share, helps determine profitability.

What Is FCF?

Free cash flow is a financial metric that shows a company's financial health. It represents the money left after a company pays for its 澳洲幸运5开奖号码历史查询:capital expenditures (CapEx). This fig🎶ure lets investors and analysts know whe෴ther a company can repay short-term debts.

Revenue and earnings are also important metrics but can be manipulated. Retailers can manipulate revenue by opening more stores. Earnings can be skewed by corporate buybacks, which reduces the share count and, ultimately, improves 澳洲幸运5开奖号码历史查询:earnings per share (EPS).

A company with a good FCF will likely make dividend payments and engage in buybacks, acquisitions for 澳洲幸运5开奖号码历史查询:inorganic growth, and innovation for organic growth. Companies with significant FCF have maneuverability that may allow for positive growth during economic booms and flexibility during an economic downturn.

Free Cash Flow Leaders

Here are five companies with large free cash flow figures as of Dec. 5, 2024, according to YCharts. Although these companies have been consistently profitable, not all have delivered consistent revenue growth in the same time frame. A high D/E ratio is usually a🌞 negative sign, but if combined with a strong cash flow generation, it can minimize the debt risk.

The Bottom Line

Free cash flow may be a st💫arting point for individuals researching long-term investment decisions. A♑ large free cash flow tells investors that a company can pay its day-to-day bills and has a strong financial footing.