But the ability to consistently grow FCF over the long haul – however it's put to use – is a proven recipe for higher share prices. There's no right answer as to the best way to use free cash flow. And if a company generates more cash than it needs to run its business, it can do a number of useful things with it, such as pay dividends, buy back its stock, acquire other companies, expand its business and knock out its debts. Free cash flow (FCF) is one of the most important financial metrics you can study, especially if you're a buy-and-hold investor.įCF is the cash remaining after a company has paid its expenses, interest on debt, taxes and long-term investments to grow its business.
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