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Free Cash Flow

    Free Cash Flow

    The measure of an effective strategy should be Free Cash Flow.

    Pretty consistently we are told the best measure of strategy is Return on Invested Capital.

    However, that is an operational measure, not a wholistic one.

    It does consider profitability, but not growth.

    What if part of the strategy is to raise outside capital?

    Or borrow money?

    Or invest into a longer-term growth plan?

    Push comes to shove, FCF > ROIC.


    1. Strategy is the means to fulfill your vision through growth and profitability.
    2. Strategy should create a long-term economic moat.
    3. Strategy should target operating leverage.
    4. Strategy should be measured in free cash flow.

    Your turn.

    Now go spark that revolution.