StocksResult
📝 What is Free Cash Flow?
💸 What is Free Cash Flow?
Imagine Chintu runs a fruit juice stall 🍊🍍.
Every month:
✔️ He earns ₹50,000 from selling juices.
✔️ He spends ₹20,000 on fruits, sugar, cups, gas, wages (daily running costs).
✔️ He also spends ₹10,000 to buy a new juicer machine 🧃 (big one-time cost).
So after all spending — how much cash is truly “free” in his pocket to use as he likes — maybe to save, party, or open a second stall? 🎉
This leftover money is called Free Cash Flow (FCF)! 💰
🎯 What is Free Cash Flow (FCF)?
👉 Free Cash Flow = Cash from Operations – Capital Expenditures (Capex)
✔️ Cash from Operations = Real cash left after paying for raw materials, staff, rent etc.
✔️ Capex = Big spending on things like machines, buildings, tools — NOT daily costs!
👉 What remains after these is called “Free” because Chintu can use this money freely — for dividends, loan repayment, expansion, or keep in his wallet! 😍
🎨 Funny Example:
✔️ Chintu earns ₹50,000 🏪
✔️ Spends ₹20,000 for daily stall needs 🍋🍬💧
✔️ Spends ₹10,000 for a new juicer machine 🧃
👉 Free Cash Flow = ₹50,000 – ₹20,000 – ₹10,000 = ₹20,000
😃 Chintu can now use ₹20,000 freely — maybe open a second stall, throw a party, or save for holidays! 🎈🎉✈️
🤔 Why is Free Cash Flow Important for Investors?
✔️ Shows how much real cash a company has left after all must-do spending! 💰
✔️ If Free Cash Flow is HIGH:
✅ Company can pay dividends 💵
✅ Can repay loans easily 🏦
✅ Can grow business 🚀
✔️ If Free Cash Flow is LOW or NEGATIVE:
❌ Company may struggle to survive 😱
❌ Might take more loans or issue shares (bad sign) 😬
🏆 When High FCF is GOOD?
✔️ Profitable and efficient business 💪
✔️ Less unnecessary spending 🧹
✔️ Can handle tough times without fear 🔒
⚠️ When Low FCF is BAD?
❌ Spending too much on machines/buildings
❌ Poor profits from business
❌ Cash shortage risk
🎈 Funny Tip:
Free Cash Flow is like your monthly salary minus all your regular expenses (like rent, food, transport) AND one-time big expenses (like buying a fridge or phone).
What remains is your "freedom money" — you can spend it as you wish! 💃🎁
✔️ High Free Cash Flow = Happy life, weekend party 🍕🥳
✔️ Low Free Cash Flow = Broke by month-end 😰
🔑 In a Nutshell:
✔️ Free Cash Flow = Real cash left after running & maintaining business
✔️ More FCF = Healthy, rich business ✅
✔️ Less or negative FCF = Weak, cash-starved business ❌
💡 "A company with high Free Cash Flow smiles in all seasons — because cash is king!" 👑💰