A negative free cash flow (FCF) of -$29.14 means that the company is spending more cash than it is generating from its operations after accounting for capital expenditures. Free cash flow is calculated as:
[ \text{Free Cash Flow} = \text{Operating Cash Flow} – \text{Capital Expenditures} ]
What does this imply?
- High Investment in Growth – If a company is investing heavily in expansion, infrastructure, or research and development, this could cause negative FCF.
- Declining Revenue or Cash Flow Issues – Negative FCF could signal that the company is struggling to generate cash from its core business activities.
- Debt or External Funding Needs – Companies with persistently negative FCF may need to raise capital through debt or equity financing.
- Temporary vs. Long-Term Issue – If negative FCF is due to planned investments, it might not be a bad sign. However, if the business is continuously losing cash, it could indicate deeper financial problems.
