Concepts

The terms the measuring pages use, each defined in one sentence that stands alone, with how this site measures it and where the definition reaches its limits. Concepts define, the pages measure, the letter interprets.

• Capital expenditures (capex)

  Capital expenditures are the cash a company pays in a period for property, plant and equipment it expects to use for more than a year, reported as an investing outflow on the cash flow statement.

• Operating cash flow

  Operating cash flow is the net cash a company’s business generated in a period before any investment or financing, reported as net cash provided by operating activities on the cash flow statement.

• Free cash flow

  Free cash flow is operating cash flow less capital expenditures: the cash a business generated in a period after paying for the assets it bought.

• Finance leases and capex

  A finance lease lets a company use an asset it does not buy outright; the asset and a matching liability go on the balance sheet, but no purchase appears in capital expenditures.

• Accrued capex

  Accrued capital expenditures are property and equipment a company has received but not yet paid for at the end of a period, so they appear on the balance sheet before they appear in capex.

• Capex versus depreciation

  Depreciation is the charge that spreads an asset’s cost over its useful life; when capital expenditures run well above depreciation, the asset base is growing faster than it is being written off.

• Long-term debt

  Long-term debt is borrowing that falls due more than a year after the balance sheet date, reported as a liability; its change over a quarter is a rough proxy for net borrowing.