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Ratios: Free Cash Flow definitions Flashcards

Ratios: Free Cash Flow definitions
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  • Free Cash Flow
    Amount of cash generated from core operations after subtracting capital expenditures and possibly dividends.
  • Cash from Operating Activities
    Cash generated by a company's main business activities, found in the operating section of the statement of cash flows.
  • Capital Expenditures
    Spending on long-term assets like machinery or buildings, necessary for maintaining or expanding operations.
  • Dividends
    Payments made to shareholders, often deducted from cash generated to determine funds available for other uses.
  • Statement of Cash Flows
    Financial report detailing cash inflows and outflows, divided into operating, investing, and financing sections.
  • Operating Activities
    Core business functions that generate cash, such as selling products or providing services.
  • Investing Activities
    Section of the cash flow statement showing cash used for or received from buying and selling long-term assets.
  • Financing Activities
    Cash flows related to borrowing, repaying debt, or transactions with shareholders, such as issuing stock or paying dividends.
  • Fixed Assets
    Long-term tangible resources like equipment or buildings, essential for business operations and expansion.
  • Net Income
    Accounting profit after all expenses, distinct from cash flow as it includes non-cash items.
  • Cash Perspective
    Analytical focus on actual cash inflows and outflows rather than accounting profits.
  • Negative Free Cash Flow
    Situation where cash from operations is insufficient to cover capital expenditures and dividends, possibly due to high investment or low cash generation.
  • Sustainable Cash Generation
    Ability to consistently produce cash from core business activities without relying on external financing.
  • Financial Health
    Overall condition of a company’s finances, often assessed by its ability to generate and manage cash.
  • Cash-Generating Power
    Capacity of a business to produce cash from its main operations, crucial for funding growth and obligations.