What Is Free Cash Flow?
Free cash flow is the cash a business generates from its operations after paying for the property, plant and equipment it needs to maintain and grow. On this site it is a calculated figure: operating cash flow minus capital expenditures, both taken from the filing.
Companies must continually reinvest. Machines wear out, stores need refitting, networks need capacity and factories need replacing. Capital expenditure is that reinvestment, recorded in the investing section of the cash-flow statement. Only the cash left after this spending is genuinely free — available for dividends, share buybacks, debt repayment or acquisitions — without weakening the business.
Free cash flow is harder to smooth than reported profit because it is built from cash movements rather than accounting judgements, though it is far from immune to timing: delaying payments to suppliers can flatter one year's figure. Reading three to five years of free cash flow side by side, as the company pages on this site allow, smooths most of that noise.
A useful yardstick is free cash flow conversion: free cash flow divided by net income. Conversion persistently above one hundred percent usually indicates a capital-light business with heavy non-cash charges; conversion persistently far below it suggests profits are being absorbed by investment or working capital, which may be healthy growth spending or a warning sign depending on the returns it earns.
Putting it into practice
Free cash flow also has a seasonality and a cycle. Capital projects are lumpy: a factory, a data-centre programme or a fleet renewal can consume several years of ordinary capital spending in one year, depressing free cash flow without signalling any deterioration in the underlying business. Companies also time discretionary spending around their fiscal year-end. This is why practitioners rarely judge a company on one year's free cash flow, and why our company pages place the figure in a multi-year table beside the operating cash flow and capital expenditure that produced it — the components explain the total.
A worked example from a real filing
Abstract definitions stick better with a real number attached. Take Nvidia Corp (NVDA): in fiscal 2026 it reported revenue of $215.94 billion in its annual 10-K filing, as republished in the SEC EDGAR company facts dataset retrieved in October 2026. Open its company page and you can place that figure next to the same company's net income, operating cash flow, total assets and diluted earnings per share for the same year — the relationships between the measures, not any single one of them, are where understanding lives. Then compare it with peers in the rankings, where the same measures are lined up across the largest filers.
For the full set of plain-English explainers, return to the Learn index, and for exactly how this site selects and labels figures, read the methodology page.