Free Cash Flow per Share
Many investors believe that Free Cash Flow is very important for valuing a company.
FCF = Free Cash Flow/Number of Shares
Free Cash Flow = FCF (Free Cash Flow)
FCF per share shows free cash flow per individual share.
Cash Flow
Cash Flow is an important measure to see how much money remains in the company.
A company can show low or negative profit, but still have high reinvestment of these funds into the company. A high level of reinvestment in the form of new assets such as buildings creates value in the company, even though it decreases profits.
Free Cash Flow (FCF)
Free cash flow mainly consists of cash flow from operating activities and from investing activities. Investors usually use FCF as this is estimated and can be distributed to shareholders.
Things to keep in mind
- A high value is good.