Free cash flow explained

Free cash flow is the cash a company generates from operations after the cash it spends on capital expenditures. It is commonly calculated as operating cash flow minus capital expenditures, both taken from the company’s filed cash flow statement.

It is a different number from net income. Net income includes non-cash items such as depreciation and accruals, while free cash flow tracks cash actually moving in and out, which is why the two can move in opposite directions in the same period.

There is no single mandated free cash flow line in financial statements. Companies and data providers can define it slightly differently — for example, by including or excluding certain leases, acquisitions, or stock-based items.

Aerarium Research computes free cash flow from reported cash flow statement values and labels it as computed, keeping the source filing, period, and accession visible so the number stays tied to the original disclosure rather than an opaque estimate.

A single period of free cash flow is not a valuation or a verdict on a company. Capital expenditure timing, working-capital swings, and one-off items can make one quarter look much stronger or weaker than the underlying trend.

Read free cash flow across several periods and alongside revenue, margins, and segment context. It is factual financial context, not a prediction of price or returns.