Most people have heard the phrase cash is king. Let me embellish on that by saying – free cash flow is king. So just what is free cash flow? Free Cash Flow (FCF) = Cash flow from operations – Capital Expenditures You can sign up to watch an additional video further explaining free cash flow and a case study on both Hyflux and Starhub here: How To Invest Profitably Like Warren Buffett: A Crash Course on Value Investing

Getting to the heart of free cash flow

Now, there are a lot of different variations of the calculations of FCF but let’s try to get to the heart of it. Free cash flow is simply the cash that is generated from your normal business operations after you net out your capital expenditures (purchases on property, plant and equipment). These capital ...