IntermediateMAD Academy0:44Fundamentals

What Is Left for the Owners

Free cash flow is the cash a business generates after keeping itself running — the number dividends and buybacks actually come from.

0:44 · 6 scenes

This lesson is part of a MAD Academy plan.

What the Lesson Covers

  1. 0:00Free cash flow is what is left after keeping the business alive.
  2. 0:05The calculation. Operating cash flow minus capital spending. Two lines, both in the filing.
  3. 0:14Why it beats net income. It counts the cash that actually left to keep the machines running.
  4. 0:23The distinction that matters. Maintenance capex keeps the lights on. Growth capex is optional and can be cut.
  5. 0:31The test to run. Compare the dividend to free cash flow. Paying more than it earns is borrowed.
  6. 0:39Check whether the payout is actually covered by it.
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Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
What Is Left for the Owners — MAD Academy Training Video · MadStockAlerts