Course 208: What Is Free Cash Flow?
Using Free Cash Flow
In this course
1 Introduction
2 What Free Cash Flow Tells You
3 Big Spending and Cash Flow Can Work Together
4 When Spending Doesn't Generate Cash Flow
5 Using Free Cash Flow

Think of free cash flow as another bottom line. Negative free cash flow isn't necessarily bad, but it suggests you're dealing with either a speculative investment (such as Rainforest Cafe) or an underperformer (such as Hitachi). Above all, negative free cash flow or a high level of capital spending naturally raises other questions. If the company is spending so much money, is it at least earning a high return on that capital? And is all that spending paying off in rapid sales and profit growth? If you're a careful investor, you'll want to know the answers to those questions before letting the company spend your money.

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