Adjustment in OCF for the changes in Fixed Assets:
FCF = OCF + Changes in Fixed Assets = OCF + ( Income from Fixed Assets sold - CAPEX ) |
| or |
FCF = Net Income + Non-Cash Expenses - Increase in Working Capital + Changes in Fixed Assets |
or |
FCF = Total Revenue - COGS - OPEX - Non-Operating Expenses - Interest - Income Tax + Non-Cash Expenses - Increase in Working Capital + Changes in Fixed Assets |
It is one of the most important measures of the Business profitability.
Positive FCF shows a clear profitability of the Business.
The early investment periods can face negative FCF but as soon as Net Income is positive with a growing FCF trend then Business can be considered as future-promising.
See also
Economics / Money / Currency / Cash / Cash Flow
Business / Business Administration / Financial Management / Financial Accounting
[ Operating Cash Flow (OCF) ][ Profit and Loss ]