On the basis of free cash flows and earnings growth, businesses can be divided into four types
Free-cash-flow generation, simply put, is the difference between the 'profits' of a company and 'capital investments' around working capital and capital expenditure. These are two distinct dimensions of business execution. Note, however, that this definition of free cash flows does not apply to lenders or insurers in the financial-services sector.
This article was originally published on September 28, 2021.
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