Free Cash Flow for the Firm

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Free Cash Flow for the Firm

A measure of a firm's cash on hand. It is calculated by taking the firm's operating cash flow and subtracting expenses, taxes, and changes to net working capital and investments. It is a way of calculating profit, among many others, to determine a company's financial health. A positive FCFF indicates that the company has raised more than enough revenue to cover its costs, while a negative FCFF indicates the opposite.