Free cash flow is THE most important financial metric.
But what is FCF and how can you calculate it?
I'll teach you everything you need to know:
This thread will consist of 8 parts.
1️⃣ What is FCF?
2️⃣ What can a company do with its FCF?
3️⃣ FCF Margin
4️⃣ FCF is NOT the same as net income
5️⃣ FCF Conversion
6️⃣ FCF Yield
7️⃣ Watch out for stock-based compensation
8️⃣ Expected return
1️⃣ What is free cash flow?
In child language, the free cash flow of a company is equal to all the cash that enters a company minus all the cash that leaves a company over a certain period.