We hear this thing a lot times where analysts/management talks about free cash flows generated by the company. Well let us help you out with this concept today.
FCF is the cash generated by company from it's operating activities after reducing the amount spent on purchase of fixed assets.
Suppose a company generates Rs. 1500 crores from it's operations (Cash flow from operating activities) and purchases fixed assets worth Rs. 300 crores in that year. The free cash flow will be Rs. 1200 crores.
Tip: A company might have cash flow from operations but not free cash flows.