From the course: Accounting Foundations: Statement of Cash Flows
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Free cash flow: Other important statement of cash flows row
From the course: Accounting Foundations: Statement of Cash Flows
Free cash flow: Other important statement of cash flows row
- The most important number in the statement of cash flows is total operating cash flow. The most important relation in the statement of cash flows is the relation between the amount of cash generated by operations and the amount of cash needed to pay for capital expenditures. Capital expenditures, or CapEx, is the label given to the amounts spent to buy land, buildings, equipments, machine, and so forth. The amount of cash used for capital expenditures can be found in the investing activities section of the statement of cash flows. The important relation between operating cash flow and capital expenditures is summarized in one number: free cash flow. The most basic definition of free cash flow is operating cash flow minus cash paid for capital expenditures. Here are the free cash flow numbers for the five largest companies in the United States as of June 2021. Each of these companies is in the trillion-dollar club,…
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