Someone says they made 10k last month from their side hustle
Cool, but first thing you should ask is — how much did you actually keep?

because bringing in money is one thing
but what’s left after you cover your stuff — that’s the part that matters

That’s free cash flow
not just how much a business earns, but how much it keeps

what does free cash flow actually mean?

free cash flow (fcf) is just the cash a company has left after running the business and paying for stuff to keep it going

the formula's simple:
cash from operations – capital expenditures = free cash flow

think of it as what’s left after the business pays for what it needs
like paying people, making the product, keeping the lights on, and investing in any upgrades or tools

what’s left is the money they can actually use — to invest more, pay shareholders, or just sit on if they want

simple example: lemonade stand logic

say a kid runs a lemonade stand
she makes $70 selling drinks
but spends $20 on lemons and cups
and gives her little brother $5 to help

that leaves her with $45
that’s her free cash flow

doesn’t matter how much she made at the top — what matters is what’s left after doing the work

same goes for a public company with billions in revenue

is revenue the same as free cash flow?

nah, they’re completely different

revenue is just sales — how much came in before paying for anything
free cash flow is what’s actually left once the business pays for everything it has to do to keep operating

you could have $100 million in revenue and still be losing cash if you’re spending more than that to stay afloat

real numbers from actual companies

in 2023, apple pulled in about $110.5B in operating cash
they spent about $10.7B on capital stuff
so they had around $99.8B in free cash flow
that’s a ton of cash they can actually use — for dividends, buybacks, or anything else

in the same year, alphabet made $101.7B in operating cash
capex was $32.2B
so they ended up with $69.5B in free cash flow
still a huge cushion, even with all that infrastructure spending

amazon’s numbers look a little different
they had $36.8B in operating cash
but spent $48.4B on capex
so their free cash flow was around –$11.6B

Not necessarily a red flag, but something to pay attention to
they’ve done this before during big growth pushes, but it’s worth understanding the why

is negative free cash flow always bad?

not always
sometimes companies are investing heavily in growth — warehouses, new markets, future stuff
like amazon’s done for years

but if fcf is negative because they’re struggling to stay above water or costs are exploding, that’s more of a concern
context matters

how do investors use free cash flow?

fcf helps show whether a business is actually functional — like, does it make money it can control?

a company with strong fcf probably:

• doesn’t need to constantly borrow money
• can reinvest in itself without raising cash
• can pay shareholders if it wants to
• has room to breathe if things slow down

it doesn’t predict stock prices
but it helps you avoid being fooled by surface-level numbers

you can use tools like tradingview to track free cash flow trends across different companies without opening a bunch of 10-Ks every time.

original tweet 👉

what’s considered good free cash flow?

there’s no perfect number
different industries have different patterns

but if free cash flow is stable or growing over a few years — good sign
if it suddenly drops — look into it

you can also check fcf margin (fcf ÷ revenue) to get a rough idea of how efficient the business is at turning sales into real money

for reference:

• apple’s fcf margin is around 25%
• google’s around 21%
• amazon’s was negative in 2023

you can also track this using a portfolio tracking tool like personal capital, which can make seeing long-term cash trends easier.

how do you actually find free cash flow?

open up the company’s 10-K
look at the cash flow statement
start with operating cash flow
subtract capex (you’ll find it in the investing section)

that’s your free cash flow
it’s usually not handed to you directly — but it’s easy math

you can also find it on sites like Morningstar or tradingview screener if you don’t want to dig through reports

is free cash flow better than net income?

they’re just different
net income is more about accounting and includes non-cash stuff
free cash flow is harder to fake and shows what’s really going on with the cash

if net income is high but fcf is low or negative, that’s a flag worth checking

what to watch out for when reading fcf

• is it consistent or all over the place?
• is the company spending more than it’s earning every year?
• are they using cash for growth, or just burning it?

also keep in mind: fcf doesn’t include debt repayments or interest — so check total cash flow and debt levels too

final thought

free cash flow is the money that’s actually left when the work is done and the bills are paid
it’s not flashy, but it’s real

it helps you see what kind of shape a company’s actually in — not just how good their earnings report sounds

next time you’re looking at a stock or business, just ask:

“after everything... how much is actually left?”

that one question will get you closer to the truth than most headlines ever will