FCF - Financing CF
hi,
i've one question regarding FCF. I've read a couple of time that the sum of operating and investing is referred to as FCF which is mainly clear. But what about potential increases in liabilities/debt regarding my financing cash flow? So they could also be distributed to shareholders/equity/debt holders.
thanks for your help!
For your question it is important to go back to the definition of FCF.
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets (this can include a minimal growth number) For that reason FCF often does not actually include a lot of the investing cash flows for a growing business. It also does not include the financing cash flows as we are assessing the operations of a business. If the business is losing money, money is likely coming in via the financing cash flows (or has and the company has significant cash and equivalents on its balance sheet) - however, the operations of the business are still producing negative cash flows and maintaining assets is still making those cash flows more negative.
Amazon is actually a company that has placed a large emphasis on its free cash flows and the first three pages of their earnings presentation from last week look at FCF in different ways; https://s2.q4cdn.com/299287126/files/doc_financials/2020/q3/Webslides_Q320_Final.pdf
Officia quod qui nihil sit sapiente id. Aliquam cumque magnam sunt. Occaecati eos consectetur quidem dicta quaerat. Aut sapiente incidunt dolores rerum est voluptatum aliquam.
Fuga fuga dolor praesentium blanditiis aut eos. Qui velit voluptates voluptas ex ducimus. Sed temporibus quam ullam nam.
Quas in natus adipisci sit. Amet corporis voluptas et perspiciatis. Fugit dignissimos sit aperiam corrupti. Iste praesentium natus voluptatem autem magnam.
Animi fugiat nesciunt deleniti. Dicta qui ipsa ab cumque. Quaerat nulla repudiandae et blanditiis et aut sunt. Dolores voluptatibus quibusdam provident ut quia voluptate consequatur. Rem dolorem repellat et tempore. Doloremque qui voluptates et dolorum aut. Facere cumque nam illum consequatur voluptate itaque.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...