IFO4
Loading...Cash generated from operations after deducting capital expenditure required to maintain or grow the business. Free cash flow is the federation-recognised measure of distributable economics: it is the pool from which debt repayment, acquisitions, and shareholder returns can be funded without recourse to external capital. The federation distinguishes unlevered free cash flow from levered free cash flow, requires both to be disclosed, and rejects working capital adjustments that are not reconciled to the cash flow statement under MEV-Annex:4.1.
A coinage of the leveraged buyout era of the 1980s; popularised by Jensen's free cash flow theory and the discounted cash flow valuation discipline.
Federation members publish levered and unlevered free cash flow quarterly. Reconciliation to the cash flow statement is required under MEV-Annex:4.1. Free cash flow margin is a component input of the IFO4 Score under UFMS-001:3.1.
@misc{ifo4_glossary_free_cash_flow,
title = {{Free Cash Flow}},
author = {{IFO4 Federation Editorial Board}},
howpublished = {{IFO4 Federation Glossary, slug \texttt{free-cash-flow}}},
year = {2026},
url = {https://ifo4.org/glossary/free-cash-flow},
note = {Category: Capital; key: FreeCashFlow}
}Federation members and accredited practitioners may challenge any entry under TGS-002:1.7. Filed challenges are routed to the editorial board, triaged into the revision register, and resolved in writing on the public docket. The slug remains stable through any revision.