Free cash flow measures the sufficiency of cash flow from operating activities to cover both capital expenditures for property,plant and equipment as well as the payment of dividends.

Free Cash Flow

Cash Flows from Operating Activities less Dividends less Capital Expenditures.

Operating Activities

The primary revenue-producing activities of an entity and other activities that are not investing or financing activities.

Capital Expenditures

Large spending by a company on physical assets like property, plant, and equipment, intended to be used for more than one year.