AccountingHub
A2

What is left after staying in business

What is left after the business reinvests in itself.

Operating cash flow

$20,000

− Capital expenditures

$10,000

Free cash flow

$10,000

subtracts the cash a company must reinvest in long-term assets just to keep operating, leaving what is genuinely available for debt, dividends, or growth.

divides operating cash flow by average total assets — 10.0% here — measuring how much cash a dollar of assets actually generates, independent of accrual accounting choices.