Free cash flow growth

Free cash flow growth measures how much a company's free cash flow expanded or contracted compared to a prior period, usually the same quarter or year one year earlier.

The formula is: (Current period FCF - Prior period FCF) / Prior period FCF x 100

Free cash flow growth can move very differently from revenue growth or net income growth in the same period, since free cash flow also reflects changes in capital expenditure and working capital that don't show up the same way on the income statement. A company can grow revenue steadily while free cash flow swings sharply from one year to the next simply because it's spending more or less to build out capacity. Because of that extra volatility, free cash flow growth is usually read over several periods rather than judged on any single year in isolation.