Free Cash Flow Margin

Profits are an accounting figure; cash is what actually pays for dividends, buybacks and growth. Free cash flow margin shows how much real cash a company keeps from each sales dollar after investing in its business.

What free cash flow is

Free cash flow is cash from operations minus capital spending, the money spent on buildings, equipment and data centers. It is the cash left over that management can use to pay dividends, buy back shares, pay down debt or make acquisitions.

Free cash flow margin is free cash flow divided by revenue.

The three parts of the cash flow statement: operating, investing and financing.

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