I don't understand your comment. The point of FCF is to restate financial reporting to determine a like-for-like measure of value for different businesses. FCF must account all costs of running the business by definition. Hint: its in the name "free". It has no relevance or use otherwise. It is like saying I do not include the costs of drinks consumed when I go to a resturant. You might not include them, but you still paid for them!
The common definition of Free Cash Flow (FCF) is cash flow from operating activities minus capital expenditures (CapEx). While there may still be obligations like lease payments or loan repayments, these are typically classified as financing activities and are therefore excluded from FCF. That said, some companies, like Amazon, choose to deduct lease payments as well, depending on their specific reporting approach or analytical needs. Ultimately, how you adjust FCF can depend on the context or purpose of the analysis, but the key is to ensure consistency and transparency in your methodology.
A great business, a great empire. Just temporary difficulties (:
Agree!
Pretty sure you are overstating FCF by 20-25% because you have not reduced them by ~3.5-4B of lease payments.
Thanks for your comment! I do not include lease payments in my free cash flow calculation because they are financing.
I don't understand your comment. The point of FCF is to restate financial reporting to determine a like-for-like measure of value for different businesses. FCF must account all costs of running the business by definition. Hint: its in the name "free". It has no relevance or use otherwise. It is like saying I do not include the costs of drinks consumed when I go to a resturant. You might not include them, but you still paid for them!
The common definition of Free Cash Flow (FCF) is cash flow from operating activities minus capital expenditures (CapEx). While there may still be obligations like lease payments or loan repayments, these are typically classified as financing activities and are therefore excluded from FCF. That said, some companies, like Amazon, choose to deduct lease payments as well, depending on their specific reporting approach or analytical needs. Ultimately, how you adjust FCF can depend on the context or purpose of the analysis, but the key is to ensure consistency and transparency in your methodology.