{"id":15565,"date":"2025-11-11T16:08:41","date_gmt":"2025-11-11T10:38:41","guid":{"rendered":"https:\/\/www.gwcindia.in\/blog\/?p=15565"},"modified":"2025-11-11T16:08:41","modified_gmt":"2025-11-11T10:38:41","slug":"what-is-free-cash-flow-why-investors-track-it","status":"publish","type":"post","link":"https:\/\/www.gwcindia.in\/blog\/what-is-free-cash-flow-why-investors-track-it\/","title":{"rendered":"What is Free Cash Flow &amp; Why Investors Track It?"},"content":{"rendered":"<h1 data-start=\"95\" data-end=\"149\"><strong data-start=\"97\" data-end=\"149\">What is Free Cash Flow &amp; Why Investors Track It?<\/strong><\/h1>\n<p data-start=\"151\" data-end=\"405\">When evaluating companies, most new investors tend to focus on metrics like <strong data-start=\"227\" data-end=\"238\">revenue<\/strong>, <strong data-start=\"240\" data-end=\"254\">net profit<\/strong>, and sometimes <strong data-start=\"270\" data-end=\"298\">earnings per share (EPS)<\/strong>. While these are important, they do not always tell the complete story about a company\u2019s financial health.<\/p>\n<p data-start=\"407\" data-end=\"625\">A company may report <strong data-start=\"428\" data-end=\"453\">high profits on paper<\/strong>, but still struggle to generate cash needed for day-to-day operations, debt payments, or future growth. That\u2019s where <strong data-start=\"571\" data-end=\"595\">Free Cash Flow (FCF)<\/strong> becomes a powerful indicator.<\/p>\n<p data-start=\"627\" data-end=\"658\">In this blog, we\u2019ll break down:<\/p>\n<ul data-start=\"659\" data-end=\"816\">\n<li data-start=\"659\" data-end=\"692\">\n<p data-start=\"661\" data-end=\"692\">What <strong data-start=\"666\" data-end=\"684\">Free Cash Flow<\/strong> means<\/p>\n<\/li>\n<li data-start=\"693\" data-end=\"718\">\n<p data-start=\"695\" data-end=\"718\">How to <strong data-start=\"702\" data-end=\"718\">calculate it<\/strong><\/p>\n<\/li>\n<li data-start=\"719\" data-end=\"756\">\n<p data-start=\"721\" data-end=\"756\">Why investors <strong data-start=\"735\" data-end=\"756\">track FCF closely<\/strong><\/p>\n<\/li>\n<li data-start=\"757\" data-end=\"790\">\n<p data-start=\"759\" data-end=\"790\">Signs of <strong data-start=\"768\" data-end=\"790\">strong vs weak FCF<\/strong><\/p>\n<\/li>\n<li data-start=\"791\" data-end=\"816\">\n<p data-start=\"793\" data-end=\"816\">Real-world <strong data-start=\"804\" data-end=\"816\">examples<\/strong><\/p>\n<\/li>\n<\/ul>\n<hr data-start=\"818\" data-end=\"821\" \/>\n<h2 data-start=\"823\" data-end=\"859\"><strong data-start=\"826\" data-end=\"859\">What is Free Cash Flow (FCF)?<\/strong><\/h2>\n<p data-start=\"861\" data-end=\"1005\"><strong data-start=\"861\" data-end=\"879\">Free Cash Flow<\/strong> represents the <strong data-start=\"895\" data-end=\"910\">actual cash<\/strong> a company has left <strong data-start=\"930\" data-end=\"1004\">after covering its operating expenses and capital expenditures (CapEx)<\/strong>.<\/p>\n<p data-start=\"1007\" data-end=\"1023\">In simple terms:<\/p>\n<p data-start=\"1027\" data-end=\"1176\"><strong data-start=\"1027\" data-end=\"1082\">FCF shows how much cash a company can deploy freely<\/strong> \u2014 to pay dividends, reduce debt, reinvest in growth, or simply save for future opportunities.<\/p>\n<h3 data-start=\"1178\" data-end=\"1193\"><strong data-start=\"1182\" data-end=\"1193\">Formula<\/strong><\/h3>\n<p><span class=\"katex-display\"><span class=\"katex\"><span class=\"katex-mathml\">Free\u00a0Cash\u00a0Flow\u00a0=\u00a0Operating\u00a0Cash\u00a0Flow\u00a0\u2013\u00a0Capital\u00a0Expenditure\\textbf{Free Cash Flow = Operating Cash Flow \u2013 Capital Expenditure}<\/span><span class=\"katex-html\" aria-hidden=\"true\"><span class=\"base\"><span class=\"mord text\"><span class=\"mord textbf\">Free\u00a0Cash\u00a0Flow\u00a0=\u00a0Operating\u00a0Cash\u00a0Flow\u00a0\u2013\u00a0Capital\u00a0Expenditure<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<ul data-start=\"1270\" data-end=\"1459\">\n<li data-start=\"1270\" data-end=\"1348\">\n<p data-start=\"1272\" data-end=\"1348\"><strong data-start=\"1272\" data-end=\"1302\">Operating Cash Flow (OCF):<\/strong> Cash generated from core business operations.<\/p>\n<\/li>\n<li data-start=\"1349\" data-end=\"1459\">\n<p data-start=\"1351\" data-end=\"1459\"><strong data-start=\"1351\" data-end=\"1383\">Capital Expenditure (CapEx):<\/strong> Money spent on long-term assets like machinery, technology, buildings, etc.<\/p>\n<\/li>\n<\/ul>\n<hr data-start=\"1461\" data-end=\"1464\" \/>\n<h2 data-start=\"1466\" data-end=\"1519\"><strong data-start=\"1469\" data-end=\"1519\">Why is Free Cash Flow Important for Investors?<\/strong><\/h2>\n<h3 data-start=\"1521\" data-end=\"1560\"><strong data-start=\"1525\" data-end=\"1560\">1. Shows Real Business Strength<\/strong><\/h3>\n<p data-start=\"1561\" data-end=\"1738\">Profits can be influenced by accounting adjustments, but <strong data-start=\"1618\" data-end=\"1650\">cash is actual money in hand<\/strong>.<br data-start=\"1651\" data-end=\"1654\" \/>A company with steady, increasing FCF is usually <strong data-start=\"1703\" data-end=\"1726\">financially healthy<\/strong> and stable.<\/p>\n<h3 data-start=\"1740\" data-end=\"1783\"><strong data-start=\"1744\" data-end=\"1783\">2. Indicates Ability to Fund Growth<\/strong><\/h3>\n<p data-start=\"1784\" data-end=\"1814\">Companies with strong FCF can:<\/p>\n<ul data-start=\"1815\" data-end=\"1952\">\n<li data-start=\"1815\" data-end=\"1840\">\n<p data-start=\"1817\" data-end=\"1840\">Expand into new markets<\/p>\n<\/li>\n<li data-start=\"1841\" data-end=\"1862\">\n<p data-start=\"1843\" data-end=\"1862\">Launch new products<\/p>\n<\/li>\n<li data-start=\"1863\" data-end=\"1952\">\n<p data-start=\"1865\" data-end=\"1952\">Upgrade technology and infrastructure<br data-start=\"1902\" data-end=\"1905\" \/><strong data-start=\"1905\" data-end=\"1952\">Without relying on debt or equity dilution.<\/strong><\/p>\n<\/li>\n<\/ul>\n<h3 data-start=\"1954\" data-end=\"2002\"><strong data-start=\"1958\" data-end=\"2002\">3. Supports Dividend &amp; Buyback Potential<\/strong><\/h3>\n<p data-start=\"2003\" data-end=\"2063\">Companies with consistent free cash flow are more likely to:<\/p>\n<ul data-start=\"2064\" data-end=\"2153\">\n<li data-start=\"2064\" data-end=\"2090\">\n<p data-start=\"2066\" data-end=\"2090\">Pay <strong data-start=\"2070\" data-end=\"2090\">steady dividends<\/strong><\/p>\n<\/li>\n<li data-start=\"2091\" data-end=\"2153\">\n<p data-start=\"2093\" data-end=\"2153\">Execute <strong data-start=\"2101\" data-end=\"2119\">share buybacks<\/strong>\u2014which increases shareholder value<\/p>\n<\/li>\n<\/ul>\n<h3 data-start=\"2155\" data-end=\"2203\"><strong data-start=\"2159\" data-end=\"2203\">4. Helps Manage Debt &amp; Survive Downturns<\/strong><\/h3>\n<p data-start=\"2204\" data-end=\"2345\">When markets slow down, companies with strong cash flow <strong data-start=\"2260\" data-end=\"2278\">survive better<\/strong>.<br data-start=\"2279\" data-end=\"2282\" \/>They can maintain operations without seeking emergency capital.<\/p>\n<p data-start=\"2204\" data-end=\"2345\"><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone size-medium wp-image-15566\" src=\"https:\/\/www.gwcindia.in\/blog\/wp-content\/uploads\/sites\/2\/2025\/11\/FCF-800x662.png\" alt=\"\" width=\"800\" height=\"662\" srcset=\"https:\/\/www.gwcindia.in\/blog\/wp-content\/uploads\/sites\/2\/2025\/11\/FCF-800x662.png 800w, https:\/\/www.gwcindia.in\/blog\/wp-content\/uploads\/sites\/2\/2025\/11\/FCF-150x124.png 150w, https:\/\/www.gwcindia.in\/blog\/wp-content\/uploads\/sites\/2\/2025\/11\/FCF.png 1024w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><\/p>\n<hr data-start=\"2347\" data-end=\"2350\" \/>\n<h2 data-start=\"2352\" data-end=\"2408\"><strong data-start=\"2355\" data-end=\"2408\">What Does Strong vs Weak Free Cash Flow Indicate?<\/strong><\/h2>\n<div class=\"_tableContainer_1rjym_1\">\n<div class=\"group _tableWrapper_1rjym_13 flex w-fit flex-col-reverse\">\n<table class=\"w-fit min-w-(--thread-content-width)\" data-start=\"2410\" data-end=\"2911\">\n<thead data-start=\"2410\" data-end=\"2455\">\n<tr data-start=\"2410\" data-end=\"2455\">\n<th data-start=\"2410\" data-end=\"2421\" data-col-size=\"sm\">Scenario<\/th>\n<th data-start=\"2421\" data-end=\"2438\" data-col-size=\"md\">Interpretation<\/th>\n<th data-start=\"2438\" data-end=\"2455\" data-col-size=\"md\">Investor View<\/th>\n<\/tr>\n<\/thead>\n<tbody data-start=\"2501\" data-end=\"2911\">\n<tr data-start=\"2501\" data-end=\"2641\">\n<td style=\"text-align: left\" data-start=\"2501\" data-end=\"2531\" data-col-size=\"sm\"><strong data-start=\"2503\" data-end=\"2530\">Consistently Rising FCF<\/strong><\/td>\n<td data-start=\"2531\" data-end=\"2589\" data-col-size=\"md\">Company is generating more cash and scaling effectively<\/td>\n<td data-start=\"2589\" data-end=\"2641\" data-col-size=\"md\"><strong data-start=\"2591\" data-end=\"2603\">Positive<\/strong> \u2014 Indicates strong financial health<\/td>\n<\/tr>\n<tr data-start=\"2642\" data-end=\"2782\">\n<td style=\"text-align: left\" data-start=\"2642\" data-end=\"2667\" data-col-size=\"sm\"><strong data-start=\"2644\" data-end=\"2666\">Stable but Low FCF<\/strong><\/td>\n<td data-start=\"2667\" data-end=\"2728\" data-col-size=\"md\">Company is managing costs but growth investment is limited<\/td>\n<td data-start=\"2728\" data-end=\"2782\" data-col-size=\"md\"><strong data-start=\"2730\" data-end=\"2741\">Neutral<\/strong> \u2014 Watch how management plans expansion<\/td>\n<\/tr>\n<tr data-start=\"2783\" data-end=\"2911\">\n<td style=\"text-align: left\" data-start=\"2783\" data-end=\"2802\" data-col-size=\"sm\"><strong data-start=\"2785\" data-end=\"2801\">Negative FCF<\/strong><\/td>\n<td data-start=\"2802\" data-end=\"2831\" data-col-size=\"md\">Cash outflow &gt; Cash inflow<\/td>\n<td data-start=\"2831\" data-end=\"2911\" data-col-size=\"md\">Not always bad \u2014 could indicate <strong data-start=\"2865\" data-end=\"2892\">heavy growth investment<\/strong>; analyze context<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<p data-start=\"2915\" data-end=\"3054\"><strong data-start=\"2915\" data-end=\"2929\">Important:<\/strong> Negative FCF is not automatically bad.<br data-start=\"2968\" data-end=\"2971\" \/>Early-stage or fast-growing companies often reinvest heavily to build capabilities.<\/p>\n<hr data-start=\"3056\" data-end=\"3059\" \/>\n<h2 data-start=\"3061\" data-end=\"3101\"><strong data-start=\"3064\" data-end=\"3101\">Example: A Simple FCF Calculation<\/strong><\/h2>\n<p data-start=\"3103\" data-end=\"3129\">Suppose a company reports:<\/p>\n<div class=\"_tableContainer_1rjym_1\">\n<div class=\"group _tableWrapper_1rjym_13 flex w-fit flex-col-reverse\">\n<table class=\"w-fit min-w-(--thread-content-width)\" data-start=\"3131\" data-end=\"3242\">\n<thead data-start=\"3131\" data-end=\"3158\">\n<tr data-start=\"3131\" data-end=\"3158\">\n<th data-start=\"3131\" data-end=\"3148\" data-col-size=\"sm\">Financial Item<\/th>\n<th data-start=\"3148\" data-end=\"3158\" data-col-size=\"sm\">Amount<\/th>\n<\/tr>\n<\/thead>\n<tbody data-start=\"3169\" data-end=\"3242\">\n<tr data-start=\"3169\" data-end=\"3205\">\n<td style=\"text-align: left\" data-start=\"3169\" data-end=\"3191\" data-col-size=\"sm\">Operating Cash Flow<\/td>\n<td data-start=\"3191\" data-end=\"3205\" data-col-size=\"sm\">\u20b9500 crore<\/td>\n<\/tr>\n<tr data-start=\"3206\" data-end=\"3242\">\n<td style=\"text-align: left\" data-start=\"3206\" data-end=\"3228\" data-col-size=\"sm\">Capital Expenditure<\/td>\n<td data-start=\"3228\" data-end=\"3242\" data-col-size=\"sm\">\u20b9150 crore<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<p><span class=\"katex-display\"><span class=\"katex\"><span class=\"katex-mathml\">FCF\u00a0=\u00a0\u20b9500\u00a0crore\u00a0\u2013\u00a0\u20b9150\u00a0crore\u00a0=\u00a0\u20b9350\u00a0crore\\textbf{FCF = \u20b9500 crore \u2013 \u20b9150 crore = \u20b9350 crore}<\/span><span class=\"katex-html\" aria-hidden=\"true\"><span class=\"base\"><span class=\"mord text\"><span class=\"mord textbf\">FCF\u00a0=\u00a0\u20b9500\u00a0crore\u00a0\u2013\u00a0\u20b9150\u00a0crore\u00a0=\u00a0\u20b9350\u00a0crore<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p data-start=\"3303\" data-end=\"3419\">This means the company has <strong data-start=\"3330\" data-end=\"3344\">\u20b9350 crore<\/strong> of free cash to use for dividends, buybacks, debt repayment, or expansion.<\/p>\n<hr data-start=\"3421\" data-end=\"3424\" \/>\n<h2 data-start=\"3426\" data-end=\"3468\"><strong data-start=\"3429\" data-end=\"3468\">Case Study Examples (Indian Market)<\/strong><\/h2>\n<h3 data-start=\"3470\" data-end=\"3488\"><strong data-start=\"3474\" data-end=\"3488\">1. Infosys<\/strong><\/h3>\n<ul data-start=\"3489\" data-end=\"3648\">\n<li data-start=\"3489\" data-end=\"3547\">\n<p data-start=\"3491\" data-end=\"3547\">Stable operations, low capital-intensive business model.<\/p>\n<\/li>\n<li data-start=\"3548\" data-end=\"3585\">\n<p data-start=\"3550\" data-end=\"3585\">Consistently strong free cash flow.<\/p>\n<\/li>\n<li data-start=\"3586\" data-end=\"3648\">\n<p data-start=\"3588\" data-end=\"3648\">Allows regular <strong data-start=\"3603\" data-end=\"3616\">dividends<\/strong>, <strong data-start=\"3618\" data-end=\"3629\">bonuses<\/strong>, and <strong data-start=\"3635\" data-end=\"3647\">buybacks<\/strong>.<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"3650\" data-end=\"3722\"><strong data-start=\"3650\" data-end=\"3672\">Investor takeaway:<\/strong> A prime example of a healthy FCF-driven business.<\/p>\n<h3 data-start=\"3724\" data-end=\"3748\"><strong data-start=\"3728\" data-end=\"3748\">2. Bharti Airtel<\/strong><\/h3>\n<ul data-start=\"3749\" data-end=\"3856\">\n<li data-start=\"3749\" data-end=\"3796\">\n<p data-start=\"3751\" data-end=\"3796\">Heavy CapEx due to telecom network expansion.<\/p>\n<\/li>\n<li data-start=\"3797\" data-end=\"3856\">\n<p data-start=\"3799\" data-end=\"3856\">Even with high revenues, FCF has fluctuated historically.<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"3858\" data-end=\"3972\"><strong data-start=\"3858\" data-end=\"3880\">Investor takeaway:<\/strong> Understand sector needs \u2014 high-growth infrastructure businesses need constant reinvestment.<\/p>\n<h3 data-start=\"3974\" data-end=\"4010\"><strong data-start=\"3978\" data-end=\"4010\">3. DMart (Avenue Supermarts)<\/strong><\/h3>\n<ul data-start=\"4011\" data-end=\"4140\">\n<li data-start=\"4011\" data-end=\"4061\">\n<p data-start=\"4013\" data-end=\"4061\">Strong operating model and efficient cash cycle.<\/p>\n<\/li>\n<li data-start=\"4062\" data-end=\"4140\">\n<p data-start=\"4064\" data-end=\"4140\">Reinvests earnings into expanding stores \u2014 sometimes lowering near-term FCF.<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"4142\" data-end=\"4222\"><strong data-start=\"4142\" data-end=\"4164\">Investor takeaway:<\/strong> Negative or modest FCF can be strategic during expansion.<\/p>\n<hr data-start=\"4224\" data-end=\"4227\" \/>\n<h2 data-start=\"4229\" data-end=\"4265\"><strong data-start=\"4232\" data-end=\"4265\">How to Use FCF as an Investor<\/strong><\/h2>\n<p data-start=\"4267\" data-end=\"4291\">Before investing, check:<\/p>\n<h3 data-start=\"4293\" data-end=\"4330\">\u2705 <strong data-start=\"4299\" data-end=\"4330\">Trend Over Time (3\u20135 Years)<\/strong><\/h3>\n<p data-start=\"4331\" data-end=\"4384\">Look for <strong data-start=\"4340\" data-end=\"4368\">consistent or increasing<\/strong> free cash flow.<\/p>\n<h3 data-start=\"4386\" data-end=\"4413\">\u2705 <strong data-start=\"4392\" data-end=\"4413\">FCF vs Net Profit<\/strong><\/h3>\n<p data-start=\"4414\" data-end=\"4453\">If profit grows but FCF doesn\u2019t, check:<\/p>\n<ul data-start=\"4454\" data-end=\"4517\">\n<li data-start=\"4454\" data-end=\"4473\">\n<p data-start=\"4456\" data-end=\"4473\">Inventory buildup<\/p>\n<\/li>\n<li data-start=\"4474\" data-end=\"4492\">\n<p data-start=\"4476\" data-end=\"4492\">High receivables<\/p>\n<\/li>\n<li data-start=\"4493\" data-end=\"4517\">\n<p data-start=\"4495\" data-end=\"4517\">Rising operating costs<\/p>\n<\/li>\n<\/ul>\n<h3 data-start=\"4519\" data-end=\"4538\">\u2705 <strong data-start=\"4525\" data-end=\"4538\">FCF Yield<\/strong><\/h3>\n<p><span class=\"katex-display\"><span class=\"katex\"><span class=\"katex-mathml\">FCF\u00a0Yield\u00a0=\u00a0FCF\u00a0\u00f7\u00a0Market\u00a0Capitalization\\textbf{FCF Yield = FCF \u00f7 Market Capitalization}<\/span><span class=\"katex-html\" aria-hidden=\"true\"><span class=\"base\"><span class=\"mord text\"><span class=\"mord textbf\">FCF\u00a0Yield\u00a0=\u00a0FCF\u00a0\u00f7\u00a0Market\u00a0Capitalization<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p data-start=\"4595\" data-end=\"4650\">A higher FCF yield generally suggests <strong data-start=\"4633\" data-end=\"4649\">better value<\/strong>.<\/p>\n<hr data-start=\"4652\" data-end=\"4655\" \/>\n<h2 data-start=\"4657\" data-end=\"4677\"><strong data-start=\"4660\" data-end=\"4677\">Key Takeaways<\/strong><\/h2>\n<div class=\"_tableContainer_1rjym_1\">\n<div class=\"group _tableWrapper_1rjym_13 flex w-fit flex-col-reverse\">\n<table class=\"w-fit min-w-(--thread-content-width)\" data-start=\"4679\" data-end=\"5073\">\n<thead data-start=\"4679\" data-end=\"4720\">\n<tr data-start=\"4679\" data-end=\"4720\">\n<th data-start=\"4679\" data-end=\"4689\" data-col-size=\"sm\">Concept<\/th>\n<th data-start=\"4689\" data-end=\"4720\" data-col-size=\"md\">What It Means for Investors<\/th>\n<\/tr>\n<\/thead>\n<tbody data-start=\"4731\" data-end=\"5073\">\n<tr data-start=\"4731\" data-end=\"4809\">\n<td style=\"text-align: left\" data-start=\"4731\" data-end=\"4766\" data-col-size=\"sm\">FCF shows <strong data-start=\"4743\" data-end=\"4765\">real cash strength<\/strong><\/td>\n<td data-start=\"4766\" data-end=\"4809\" data-col-size=\"md\">Helps evaluate long-term sustainability<\/td>\n<\/tr>\n<tr data-start=\"4810\" data-end=\"4898\">\n<td style=\"text-align: left\" data-start=\"4810\" data-end=\"4857\" data-col-size=\"sm\">Strong FCF enables <strong data-start=\"4831\" data-end=\"4856\">dividends &amp; expansion<\/strong><\/td>\n<td data-start=\"4857\" data-end=\"4898\" data-col-size=\"md\">Good sign for stable growth companies<\/td>\n<\/tr>\n<tr data-start=\"4899\" data-end=\"4983\">\n<td style=\"text-align: left\" data-start=\"4899\" data-end=\"4932\" data-col-size=\"sm\">Negative FCF is not always bad<\/td>\n<td data-start=\"4932\" data-end=\"4983\" data-col-size=\"md\">Evaluate growth strategy and capital allocation<\/td>\n<\/tr>\n<tr data-start=\"4984\" data-end=\"5073\">\n<td style=\"text-align: left\" data-start=\"4984\" data-end=\"5025\" data-col-size=\"sm\">Trends matter more than single numbers<\/td>\n<td data-start=\"5025\" data-end=\"5073\" data-col-size=\"md\">Analyze multiple years, not one-time results<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<hr data-start=\"5075\" data-end=\"5078\" \/>\n<h2 data-start=\"5080\" data-end=\"5101\"><strong data-start=\"5083\" data-end=\"5101\">Final Thoughts<\/strong><\/h2>\n<p data-start=\"5103\" data-end=\"5322\">Free Cash Flow is one of the <strong data-start=\"5132\" data-end=\"5160\">most reliable indicators<\/strong> of a company\u2019s <strong data-start=\"5176\" data-end=\"5201\">true financial health<\/strong>.<br data-start=\"5202\" data-end=\"5205\" \/>It cuts through accounting adjustments and shows whether the business is actually generating <strong data-start=\"5298\" data-end=\"5321\">liquid, usable cash<\/strong>.<\/p>\n<p data-start=\"5324\" data-end=\"5366\">As an investor, focusing on FCF helps you:<\/p>\n<ul data-start=\"5367\" data-end=\"5531\">\n<li data-start=\"5367\" data-end=\"5419\">\n<p data-start=\"5369\" data-end=\"5419\">Avoid companies that only look profitable on paper<\/p>\n<\/li>\n<li data-start=\"5420\" data-end=\"5485\">\n<p data-start=\"5422\" data-end=\"5485\">Identify businesses with <strong data-start=\"5447\" data-end=\"5485\">real, sustainable growth potential<\/strong><\/p>\n<\/li>\n<li data-start=\"5486\" data-end=\"5531\">\n<p data-start=\"5488\" data-end=\"5531\">Make smarter long-term investment decisions<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"5533\" data-end=\"5623\"><strong data-start=\"5533\" data-end=\"5623\">If you learn to evaluate FCF effectively, you are already ahead of most new investors.<\/strong><\/p>\n<p data-start=\"5901\" data-end=\"6063\"><strong>Related Blogs:<\/strong><\/p>\n<p data-start=\"5901\" data-end=\"6063\"><a href=\"https:\/\/www.gwcindia.in\/blog\/how-to-use-annual-reports-to-evaluate-a-company\/\" target=\"_blank\" rel=\"noopener\">How to Use Annual Reports to Evaluate a Company<\/a><\/p>\n<p data-start=\"5901\" data-end=\"6063\"><a href=\"https:\/\/www.gwcindia.in\/blog\/?p=14286&amp;preview=true\">How to Analyze Management Quality Using Publicly Available Data<\/a><\/p>\n<p data-start=\"5901\" data-end=\"6063\"><a href=\"https:\/\/www.gwcindia.in\/blog\/how-to-read-a-companys-balance-sheet-before-investing\/\" target=\"_blank\" rel=\"noopener\">How to Read a Company\u2019s Balance Sheet Before Investing<\/a><\/p>\n<p data-start=\"5901\" data-end=\"6063\"><a href=\"https:\/\/www.gwcindia.in\/blog\/what-is-fundamental-analysis-a-beginners-guide\/\" target=\"_blank\" rel=\"noopener\">What Is Fundamental Analysis? A Beginner\u2019s Guide<\/a><\/p>\n<p data-start=\"5901\" data-end=\"6063\"><a href=\"https:\/\/www.gwcindia.in\/blog\/understanding-the-income-statement-a-beginners-guide\/\" target=\"_blank\" rel=\"noopener\">Understanding the Income Statement: A Beginner\u2019s Guide<\/a><\/p>\n<p data-start=\"5901\" data-end=\"6063\"><a href=\"https:\/\/www.gwcindia.in\/blog\/understanding-cash-flow-statements-for-investors\/\" target=\"_blank\" rel=\"noopener\">Understanding Cash Flow Statements for Investors<\/a><\/p>\n<p data-start=\"5901\" data-end=\"6063\"><a href=\"https:\/\/www.gwcindia.in\/blog\/the-role-of-corporate-governance-in-investing\/\" target=\"_blank\" rel=\"noopener\">The Role of Corporate Governance in Investing<\/a><\/p>\n<p data-start=\"5901\" data-end=\"6063\"><strong>Disclaimer:<\/strong>\u00a0This blog post is intended for informational purposes only and should not be considered financial advice. The financial data presented is subject to change over time, and the securities mentioned are examples only and do not constitute investment recommendations. Always conduct thorough research and consult with a qualified financial advisor before making any investment decisions.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is Free Cash Flow &amp; Why Investors Track It? When evaluating companies, most new investors tend to focus on metrics like revenue, net profit, and sometimes earnings per share (EPS). While these are important, they do not always tell the complete story about a company\u2019s financial health. A company may report high profits on [&hellip;]<\/p>\n","protected":false},"author":7,"featured_media":15570,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[2768,2693,2493,2766,2769,2676,2765,2674,2767,2672,2761,2703,49,2704,2719,2565,2534,370],"class_list":["post-15565","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-cash-flow-analysis","tag-company-valuation","tag-equity-investing","tag-fcf","tag-finance-blog","tag-financial-statements","tag-free-cash-flow","tag-fundamental-analysis","tag-how-to-analyze-companies","tag-investing-basics","tag-investment-research","tag-investor-guide","tag-long-term-investing","tag-personal-finance","tag-portfolio-building","tag-retail-investors","tag-stock-market-education","tag-value-investing"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/posts\/15565","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/comments?post=15565"}],"version-history":[{"count":2,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/posts\/15565\/revisions"}],"predecessor-version":[{"id":15569,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/posts\/15565\/revisions\/15569"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/media\/15570"}],"wp:attachment":[{"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/media?parent=15565"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/categories?post=15565"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/tags?post=15565"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}