Paraphrase An important determinant of a firm's value is the amount of cash it can produce over time. Such computation of cash flows is termed as free cash flow. Free cash flow reflects the amount of cash flow cash that is available to the firm after meeting all cash commitments. This concept is different from accounting profits reflected in the Income Statement. Accounting profits, though important to analyze a company, can't be withdrawn entirely since they might have to be ploughed back into the business