Say you knew a company's net income. How would you figure out its "free cash flow"?



Say you knew a company's net income. How would you figure out its "free cash flow"?..

Answer / Akash Saxena

To calculate Free Cash Flow (FCF), start with net income, then adjust for changes in working capital accounts (such as adding back depreciation and amortization, changes in accounts receivable, inventory, and accounts payable) and add or subtract capital expenditures (purchases or sales of property, plant, and equipment). The formula can be expressed as: FCF = Net Income + Depreciation and Amortization + Changes in Working Capital - Capital Expenditures

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