Valuation Terms

Free Cash Flow

Cash left after the business pays normal operating costs and needed investments. Why it matters: Free cash flow helps buyers estimate how much cash remains for debt payments, owner distributions, reinvestment, or future acquisitions.

Related terms

Cash Flow

The actual cash moving in and out of the business. Why it matters: A profitable business can still run short on cash, so buyers study cash flow to see whether the company can pay bills, fund growth, and support debt.

More from Valuation Terms

Add-Backs Adjusted EBITDA CapEx Cash Flow EBITDA Enterprise Value Equity Value Gross Margin Gross Profit Multiple Net Income Net Working Capital

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