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Free Cash Flow (FCF) is the income that excluded all non-cash expenses and include all the capital expenditure, such as the purchase of property, plant and equipment (PPE). It also shows the available cash for the company to repay the loan or pay dividends to investors. Some investors would prefer to use FCF over the net income or Earning per Share (EPS) because non-cash items (depreciation, one-off items) are eliminated.

The benefit of using FCF is that it sometimes can reveal the weakness of a company’s cash flow. For instance, if Company A earn RM10 million, but the FCF has been decreasing due to higher inventories and delay payments, it shows the company is undergoing a serious financial weakness.


In order to calculate FCF, you shall use the formula attached in the picture:

Use FPGROUP as an example, we shall use this formula to calculate the Free Cash Flow

FCF = 23,323,545 – (6,190,608 + 18,700) = 17,114,237

We can also further compare its EPS with FCF per share, by dividing the FCF with total number of shares. As shown in the picture below, FPGROUP has 542.32mil of shares. Thus, we can use (17,114,237 / 542,320,000 x 100) to get 3.16 cents per share.

FCF per share is often more accurate because when a company is doing lots of expansion, its depreciation will increase as well, dragging the entire profit down, hence by calculating FCF per share, a company’s value can be assessed in a more accurate way.







FCF = 23,323,545 – (6,190,608 + 18,700) = 17,114,237

我们还可以拿每股自由现金流和每股净利(EPS) 来做比较。图片中有显示FPGROUP有5.42亿股,所以我们可以用 (17,114,237 / 542,320,000 x 100) 来得到每股3.16 仙的自由现金流。



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