The money truly left after all running costs and investments, free to be used. Often more honest than reported profit, because it's harder to dress up.
MoatLens tip: A simple rule: profit is opinion, cash is fact. Free cash flow is the money that really reaches you as an owner. Mind the industry: companies that must constantly invest a lot (e.g. telecom, utilities, industry, real estate) structurally have less free cash; for banks the metric barely fits. Ideal is a company that throws off lots of cash without constantly devouring new capital – it can pay dividends, buybacks and growth out of its own pocket.
Free cash flow is the money a company actually has left after all operating costs AND necessary investments have been paid.
Why does this matter?
The reported profit on the balance sheet is an accounting figure — it can be distorted by depreciation, accounting rules and other effects. Free cash flow, by contrast, shows how much cash really flows into the till. The company can use this money for dividends, share buybacks, debt reduction or new investments.
What counts as good?
MoatLens perspective: Cash flow is considered especially meaningful because it's harder to manipulate than book profit. The decisive question is: how much real money comes out at the end that belongs to the owners?
What to watch for: Compare free cash flow with reported profit. If profit is significantly higher than free cash flow over several years, it's worth looking more closely at why.
In MoatLens this explanation sits right next to the number — one tap away. And you see the ten-year trend instead of a single value.
