Free cash flow is the measure of operating cash flow available for corporate purposes after providing sufficient fixed asset additions to maintain current operations.

Question

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Free cash flow is calculated by subtracting capital expenditures from operating cash flow, leaving the amount available for other purposes such as debt repayment, dividends, share buybacks, and new projects. This calculation ensures that enough money is set aside for maintaining and expanding the company's existing assets while also providing flexibility for other uses of cash.

Free Cash Flow Is the Measure of Operating Cash Flow