Category: Financial Management

Cash > Profit

Free cash flow (FCF) which is the latest invention of finance engineering has been forging ahead towards being a significant indicator in corporate companies. In short; free cash flow states the difference between your cash inflow that you obtain as a result of your operational activities and your cash outflow that you bear due to your investments. If difference is positive, we can say that you are managing your company correctly and you are earning real money rather than just profit. Another reason that the free cash flow is important is that it allows a company to search for opportunities which will increase its shareholder value. Primary objectives of companies are to grow and to make profit, however, cash flow management is important, as well. At this point, the key is to establish a balanced growth strategy in the name of sustainability.