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What is the difference between cash flow and free cash flow?

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posted Jul 28 by Ati Kumar

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Cash flow refers to a stream of revenue or expense that alters a cash account over a specified time frame. Free cash flow (FCF) is a measure of a business’s financial performance. It is calculated as the difference between cash flow and capital expenditures.

Cash inflows result from any of the following three activities: financing, investments or operations. Cash outflows, on the other hand, result from expenses or investments. A statement of cash flows is an accounting statement that shows the amount of income generated and used by the business in a given time period. It is calculated by summing non-cash charges including depreciation, with net income after taxes. The data used in the statement of cash flows are obtained from the business’ balance sheet.

answer Jul 29 by Ramesh Gowda
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