Operating cash flow (net income plus amortization and depreciation) minus capital expenditures and dividends. Free cash flow is the amount of cash that a firm has left over after it has paid all of its expenses, including investments. Negative free cash flow is not necessarily an indication of a bad firm, however, since many young firms put a lot of their cash into investments, which diminishes their free cash flow. Howeer, if a firm is spending so much cash, it should have a good reason for doing so and it should be earning a sufficiently high rate of return on its investments.