Explore BrainMass

Free Cash Flow and Importance to a Business

Explain free cash flow and its importance to a business.

Solution Preview

Step 1
Free cash flow is the cash that a company has left after it has defrayed all its expenses. The expenses include cost of investments. Free cash flow is an excellent indicator of the health of the business. Free cash flow is the cash flow available for distribution among all security holders of the organization (a).

Step 2
Free cash flow is important to businesses because it indicates the freedom with which a business can grow and pay ...

Solution Summary

This solution explains free cash flow. The sources used are also included in the solution.