The Factors Affect the Free Cash Flow in the Joint-Stock Companies

Abstract

There are several types of cash flows in the course of a business. The total (gross) amount of money is fixed in the NCF indicator (net cash flow), which is formed on the basis of the summation of all positive and negative financial transactions from the investment, financial and operating activities of the company. However, another indicator is much more expressive.

Free cash flow (FCF - free cash flow) is the amount of money that remains at the disposal of owners and investors after deducting all taxes, as well as capital investments. In fact, it is cash that increases the company's shareholder value and expands its asset base. If the FCF has a good positive indicator, then the company can develop and produce new products, pay increased dividends, acquire assets, and therefore become more attractive to its shareholders.