Free Cash Flow

The sum of cash flow from operations and the use of cash for investing activities. This is the most appropriate measure of a company’s burn rate because it includes all expenses related to operating the business irrespective of the financing model. Cash flow from financing activities is not relevant because companies’ make different choices on funding strategy, specifically relating to the mix of equity and debt, based upon market conditions that are unrelated to business operations. It is the best way in which to ensure benchmarks apply.

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