Free Cash Flow, conceptually, is the total amount of cash you would have from the company's operations as a single owner of the company in a given year. The im

Free Cash Flow, conceptually, is the total amount of cash you would have from the company's operations as a single owner of the company in a given year. The importance of free cash flow lies in how capital investment (buying buildings, factories, or other companies, among other things) is treated. When a company invests money, it doesn't count against the company's profit. It is just treated as one asset turning into another asset. /BUT/, if a company is essentially /required/ to invest money in new capital to keep the business going (think capital intensive businesses like oil exploration), as an owner you have to budget that you'll need cash to invest in new things, reducing the amount that actually comes to you. That hit doesn't show up in profit or revenue, but it does show up in free cash flow.