What is Free Cash Flow?

[@MapAtlass]

Great content Phil, Netflix is probably the best example of net earnings being misleading, when they are delivering negative free cash flow year after year.

[@TheOpenCriticalmind]

Hi, may i ask where do you look for net earnings?

[@corruptodestructo]

@@TheOpenCriticalmind Income statement. The last line. Usually labeled as net income. It's also the same as the top line in the cash flow statement if you need to verify.

[@IMMERSIVEVOICE]

@@Sanctimonious007😂

[@action-money]

Thanks for this easy and understandable explanation. I looked several other videos, read other articles buy couldn't wrap my head around it. You nailed it in just 6 minutes! Priceless!

[@VladimirFinAdv]

The best explanation of FCF I found in several days of watching videos on the topic! Thanks, Phil!

[@wannaknowbad]

This is an oldie but goodie. I'm still learning and have a long way to go. Thanks Phil for all that you do!

[@rowanellis8259]

Phil Town! In the past 6 weeks I've listened to 80 episodes of you and Danielle and this is the first time I've seen your face. I had all kinds of positive feelings. Thanks for everything you do!

[@mmmsome]

Finally a finance dude on YT that actually makes sense

[@xm8909]

That’s the best explanation I’ve ever heard about free Cashflow. Even my professor couldn’t explain it that good.

[@eddiewawa]

Thanks Phil, never understood what free cash flow was and its importance, but now I do in particular in light of tesla Q2 2019 results. Great vid sir

[@doudoubingdu882]

Thank you very much for the explanation. I watched all the videos regarding the 3 financial statements and those are the most articulate and simplest ones I've ever watched. Thanks a lot!

[@PhilTownRule1Investing]

Thank you for watching, Jessica!

[@pwatom22]

Great summary of the headline key points. Now, a video that explains how we can find that information easily and ideally for stock picking would be good.

[@bayleelebron2910]

This is really great. Great speaker. Very helpful. Had to subscribe.

[@PhilTownRule1Investing]

Thanks for being here, Baylee. Glad to hear you're enjoying the content! Stay tuned.

[@josephwhite9628]

Thank you for pointing out the share buybacks are only worthwhile for investors, when the stock is cheaper than intrinsic value.

[@teddyperera8531]

The best video in youtube explaining the concept. Thank you

[@carlrygwelski586]

I wish you were my professor. Great energy man

[@Legui1231]

You are the only person that could teach me clearly this concept Thank you!

[@waqashamidi9733]

Great explanation.

[@eyesonlyyt2]

Amazing, please keep doing this forever!! - Subscribed

[@APC-pm2on]

His books quite good too I'm still reading it

[@alikarimov1770]

Xvbcf

[@KiyosakiSays]

“Cash flow tells the story of how a person handles money.” - Robert Kiyosaki

[@mattsmith168]

phenomenal explanation

[@thumbrule]

This was explained in such easy terms. Thank you so much.

[@9Trillionaire]

You sir are a legend. Subbed

[@sumaiyashaikh5220]

Thank you Mr.Phil you saved me I have an interview in coming days and I was worried how should I prepare for it. Your explanations are simple easy to understand.

[@vusiskosana7983]

BEAUTIFUL. Clear. Precise. Thank you!

[@alessandrobianco7183]

Purchase of property and equipment. Is that not a reinvestment of cash in the business? Were in the cash flow statement can I see how much is reinvested in the company? Great video Phil, I love your contents :)

[@aman888]

Best takeway from this is the last line. Make sure the cash flow is close to or as good as the net earnings.

[@jamespaz4333]

Excellent explanation Sr. Thank you!

[@kewldewd8334]

Excellent analysis of FCF. Thank you sir.

[@naillz1818]

Excellent explanations

[@bob6168able]

Excellent.. and away from a lot of formulas,... Thanks

[@Firekid144]

Amazing explain of FCC. Thank you

[@kartikbhardwaj9240]

You explained it beautifully. Made it so simple. Thank you.

[@ramachandranprakash1400]

simple and precise, great job phil thank you

[@valerierodriguez9058]

Finally, I understood. Thank you.

[@hasansheikh3680]

perfect explanation

[@maxjames00077]

You explained this so well!

[@connergesbocker9902]

Phil is the goat

[@qaisurrehman]

Great Explaination and great video, thank you for sharing your knowledge.

[@jnkvngz2965]

awesome explanation!

[@GreenDistantStar]

Well yes, but if retained earnings are reinvested in the business, the application of those funds are likely to be found in the list previously mentioned. And making provisions for upkeep etc ensures the value of fixed assets is maximised.

[@BeingOfLight-gq4fm]

Scenario: I get money from running my laundry mat, I pay taxes for building, Then I replace some of the machines, I pay taxes, Then I pay the employees and they of course pay taxes. Question: How are you suppose to have money left over? It looks like you get taxed 3 or more times, How do you avoid this?

[@brandonglidden]

Thanks for taking the time to explain this!

[@AmeyAlshi02]

It was a great video! Very informative! Thank you Phil!

[@Wildboy789789]

Thank u... pacer has some cash flow etfs, gcow is what i use, global companies screened for cash flow then screened for dividends then weighed by yeild

[@nv6399]

Thanks Phil for a great content and best explaination.

[@tejasmandulkar3596]

Very very good explanation, thank you so much

[@satyajiet]

Explained in the most amazing and simple way.

[@fase144]

Thank you, very well explained

[@gregduda6839]

Ok. I agree that one of the three uses of free cash-flow is to expand the business. Therefore you should only be subtracting Maintenance Capex and not the Expansion Capex. This requires more digging to determine that portion of Capex which is for maintaining current operations and that portion of Capex which is for expanding the business. Also please subtract stock based compensation as well since this is really just a hidden cost of labor.

[@timscan7273]

Very interesting insights. Thanks for the upload.

[@minghaoed8]

Thank you for this, sir! God Bless!!!

[@DarkaFire]

Excellent video, thanks Phil!

[@huynguyenhodinh8709]

So good.

[@hear105]

I dont like share buybacks, they're never guarenteed. if you want to return capital to investors you either raise the dividend yield in perpetuity or do a special dividend. Although its not tax efficient, when a stock buyback occurs, one has to let the management continue to deploy that free cash flow exlusively to that name. Whereas there is more certainty in cash itself.

[@kameshthukkaram]

super explanation, thank you

[@Toddd-eh6hi]

Great video!

[@shatteredsoldier81]

That was very helpful

[@JjohnStrong]

Great explanation , now I know

[@baktashjami]

Well explained! Would you explain also the intuition on free cash flow to equity and free cash flow to firm?

[@NavShay]

Great explanation thanks

[@farhatullah5603]

very well explained thank you for that but i have a question. are we suppose to subtract the amount being used in buying intangible assets to get free cash flow? they are necessary to keep the pace but we will still stay in business if we don't buy them. please explain

[@thurstonhowellthe3rd]

Share buy backs: like buying out your partner for the right price,. You then benefit from keeping future profits he no longer has claim to.

[@josefinschwartz8309]

great video sir! keep up the good work!

[@Exceltrainingvideos]

Well explained.

[@maxsymons7016]

Excellent Video

[@javierperez-zd3se]

Wow, really good explanation!!

[@kevinderosa4129]

Shouldn’t you add back in depreciation and amortization?

[@anthonyramjattan4902]

Do you offer mentorship for newly M&A students?

[@簡瑞宏-t1b]

incredibly great video with smart insights!

[@adamdintelman2067]

How is this different from Net Income?

[@SwanteeSwe]

Does FCF apply to real estate companies or is there another key figure or number for those? Realty Income will probably keep paying and rising dividend. FCF is lower than the dividend in this case. W.P Carey same thing. The key question is, does FCF apply on all types of companies or are there exceptions?

[@eclectictrader5827]

Explained quite well.

[@omegaboostZ]

amazing explanation! Definitely subscribed.=)

[@SarkisKlinik]

Hi, which metrics show us if they are reinvesting?

[@shyamvagishgiri1718]

Thank u sir for the wonderful content

[@akshay6011]

Free cash flow should be utilized to reinvest and grow the company. But that includes investing in properties and machinery as need which would lead to lesser cash flow next year if everything stays the same & investments take time to add to rev & profits. Isn't this a cyclic problem or is new investment not accounted in cash flow statement for prop & machinery

[@devidigs-lofichillhop8645]

thanks nicely done

[@Discovery_and_Change]

Is price-to-cash-flow referring to general cash flow or to free cash flow?

[@josephfriday2661]

Excellent!

[@tomaszj.6628]

Love it.. Thank you

[@kranti137]

Phil price to free cash flow is same thing or free cash flow is different. If free cash flow is Negative what's that mean. If free cash flow is very very high what's that means Please explain as soon as possible i am waiting ur reply Thank you.

[@QWERTYQWERTY-oo2wm]

Given the current economic landscape, how realistic is it to expect free cashflow equals net profit? I agree it is a great method but given the balance of probability I would dare say there is only a few companies out there that would fit that metric (Free cashflow = net profit). Thankyou for creating this video, very informative, T.

[@engrbutanding1980]

Is "Cash Flow from Operations" the same as "NET Cash Provided from Operating Activities"? Thanks

[@Jnoel608]

So these pivots are only based on previous days range instead of actual short term support and resistance.

[@markc5771]

Is there a certain benchmark for each individual sector that we're trying to find relative to our companies cash flow?

[@zmartinmusic]

Fantastic content

[@derffgggdf]

😉❤️❤️ best explained sir 🤩🤩

[@rohita123456789]

Hello Phil, ca you post video explaining difference between FCF and FCFE? Thanks.

[@AntonisApostolakis]

I could not find the line "Purchase of Property and Equipment" in the Cash Flow statement shown in Yahoo Finance for stocks FB, MSFT and F. I found instead "Capital Expenditure" which when subtracted from "Operating Cash Flow" then it equaled the Free Cash Flow shown on the Yahoo Finance's Cash Flow statement. What is the relationship of "Capital Expenditure" to "Purchase of Property and Equipment" as far as Cash Flow calculation is concerned?

[@Dan0mite95]

Great videos Phil! I really enjoy watching and learning more. And just one question; how do we know how much stock the company is repurchasing? Where can I find this information in the financial reports? Thanks

[@EvanEvansE3]

How is FCF different than "profit" or Net Income?

[@habibbialikafe339]

U should have explained why buying back shares at a lower price then why you believe it is worth is important and what else is subtracted to obtain FCF. It's not always just op income minus PPE

[@augustusg857]

On the cash flow statement you dont see the fcf being used to reinvest into the company.

[@phantomcreamer]

Is free cash flow cumulative or just what they made in that quarter? In other words, if they made say 5M in cash last quarter, is that added to the fcf of the next quarter? Or, is fcf just how much cash they got in a single quarter?

[@pietervdb8070]

We are looking for the amount of cashflow which can be reinvested, however what if the cash has been reinvested in PPE? A practical but imperfect solution would be to rather take operating cashflow less depreciation, as depreciation represents the annual cost of utilising PPE?

[@anshultiwari1982]

Hi. What is the difference between free cash flow and equity??

[@ChaceBonanno]

Is Purchase of Property and Equipment the same as Capital Expenditures?

[@PicknTime]

Yes it is...But I'm wondering what is the "Sticker Price"

[@Jordan-kk5xj]

FaraJi "intrinsic value", he mentions at 5:10

[@vitaminb4869]

There is no such thing as a "sticker price". It's all subjective and based on personal opinions. If there was, then the price would always reflect that.

[@toneg9015]

Is there another term for Property, Plant and Equipment? Some Cash flow statements do not have it. A lot of them have capital expenditures or something similar but PP&E is sometimes not there.

[@desaturated6049]

in short, Is free cash flow as good as savings? just that using those savings and reinvest back.

[@thenomadicprofessor6696]

what if there's cash flow from disposal of invesments? Do we need to add back to cash from operationsmto get the fcf?

[@gmc9753]

What about acquisitions and divestitures? They are in the cash flow statement. Do they affect FCF?