Pay more attention to “free cash flow”

You may not need another metric to measure your business but CFO Magazine recently described an interesting new metric called “free cash flow growth profile” as a measure of measuring the amount of discretionary cash available. In this context, “discretionary” means “no strings attached”.

While you could calculate that benchmark for other companies in your industry, it might be just as helpful to measure this over the last 3-5 years to see how it has changed for your company. If nothing else, it may give you some idea about how your company is faring in this economy and how dependent you are on outside capital.

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