A question from a complete novice.
I have read about using free cash flow to evaluate a company, which is the amount of cash generated that the company is free to retain or pass back to its shareholders. It is generally defined as profit after tax plus depreciation and amortization less capital expenditure.
I am confused, but shouldn't one obtain cash flow information from the cash flow statement, or are they talking about different type of cash flows? Put another way, is there any way one can derive free cash flow from the cash flow statement? Afterall, the cash flow statement is supposed to give an objective picture of a company's performance, in terms of its cash position, and if one computes free cash flow from profit (from the P&L statement), doesn't one lose that objectivity, or is there no way round this?
Thanks in advance.