Free cash flow
Cash the business does not need
Free cash flow is the cash a company generated from operating, less what it spent on the physical assets needed to keep operating. It is what is genuinely available to pay dividends, buy back shares, repay debt or make acquisitions.
Profit is an accounting opinion; cash flow is a bank balance. Both are useful, and where they disagree is usually the most interesting thing on a company page.
Why it differs from net income
Depreciation reduces profit without any cash leaving, so a capital-heavy company often reports far more cash flow than profit. Working capital runs the other way: a fast-growing company funding more inventory and more unpaid customer invoices can be genuinely profitable and still consume cash every quarter.
Neither pattern is inherently good or bad, but a persistent and widening gap in either direction is worth understanding rather than averaging away. Profit rising while cash flow falls, year after year, is one of the more reliable signals that something in the accounting deserves attention.
The stock-based compensation argument
Share-based pay is a real cost - it dilutes existing owners - but it is not a cash payment, so it is added back and increases reported free cash flow. For companies that pay heavily in equity, this can be a large fraction of the figure.
There is a genuine disagreement among investors about whether to subtract it, which is why the cash flow tables here show stock-based compensation as its own column beside free cash flow rather than picking a side. You can read the number both ways; what you should not do is read the headline figure without knowing how much of it is that add-back.
Reading it over time
A single year says very little. Capital spending is lumpy, a new factory or a large acquisition distorts one period, and a company can flatter a year simply by deferring investment.
The shape across a decade is what carries information: whether cash generation grows with revenue, whether it survives a downturn, and whether the capital spending that consumes it is producing anything. That is why the company pages show ten years rather than the most recent figure.
