Free Cash Flow:

Free cash flow (FCF) is a measure of financial performance calculated as operating cash
flow minus capital expenditures. Free cash flow (FCF) represents the cash that a
company is able to generate after laying out the money required to maintain or expand
its asset base.
Formula: EBIT(1-Tax Rate) + Depreciation & Amortization - Change in Net Working
Capital - Capital Expenditure
It can also be calculated by taking operating cash flow and subtracting capital
expenditures
Difference: CF and FCF
Cash flow refers to a stream of revenue or expense that alters a cash account over a
specified time frame. Free cash flow (FCF) is a measure of a businesss financial
performance. It is calculated as the difference between cash flow and capital
expenditures.
Cash inflows result from any of the following three activities: financing, investments or
operations. Cash outflows, on the other hand, result from expenses or investments. A
statement of cash flows is an accounting statement that shows the amount of income
generated and used by the business in a given time period.
FCF = Operating cash flow capital expenditures. The data used for calculating a
companys free cash flow is usually obtained from its cash flow statement. For instance,
if company ABCs cash flow statement recorded $20 million from operations and $10
million of capital expenditures for the year: Company ABCs free cash flow (FCF) = $20
million - $10 million = $10 million.

Discounted Cash Flows

A discounted cash flow (DCF) is a valuation method used to estimate the attractiveness
of an investment opportunity. DCF analysis uses future free cash flow projections and
discounts them to arrive at a present value estimate, which is used to evaluate the
potential for investment.