If you learn only one financial metric in fundamental analysis, learn free cash flow. FCF is the cash a business actually generates and has available for shareholders after all operating expenses and capital investments are paid. Net income is an accounting construct subject to accrual rules, non-cash adjustments, and management discretion.

FCF is what's left in the bank — harder to manipulate, more directly tied to economic value, and the foundation of every serious valuation methodology. Buffett's 1986 chairman's letter introduced 'owner earnings' (a closely related concept); Damodaran's valuation work treats FCF as the central variable; the empirical research on factor returns consistently flags FCF-yield-rich companies as outperformers over multi-decade horizons. FCF = Operating Cash Flow − CapEx.

The cash available after the business pays for its operations and reinvests to maintain and grow itself. FCF yield = FCF ÷ Market Cap.