Free Cash ROA (TTM)

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Definition

Free Cash ROA (TTM) is a company's generation of free cash flow (FCF) over its total assets. While similar to cash ROA, free cash ROA uses FCF instead of Cash Flow from Operations in the numerator. FCF is the cash flow of operations less spending in property, plant, expenditures.

Free Cash ROA answers the question, "How much did the company generate for the firm stakeholders (debt and equity) over its total assets?" If Microsoft had a free cash ROA of 30 percent and assets worth a total of 100 billion, Microsoft would be generating 30 billion dollars of free cash flow to its stakeholders (debt and equity). A higher free cash ROA is a more positive sign for shareholders.

Note : This ratio should not be used in analyzing banks due to the way that banks report selling assets on its cash flow statement.

Formula

YCharts calculates this as (Cash Flow from Operations - Net Change in PPE) over Total Assets.

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