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Free Cash Flow (FCF)

Free Cash Flow show the actual cash available for distribution to investors after the company has made all the investments in new products, fixed assets and working capital. Free Cash Flow may give a clearer view of the company’s ability to generate cash.

Free Cash Flow = Operating Cash Flow - Investments in Operating capital

Free Cash Flow = EBIT(1-Tax Rate) + Depreciation & Amortization - (Change in Net Working Capital + Capital Expenditure)