What is the difference between net income and free cash flow?

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1243784

2026-03-11 08:10

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Here are some simplistic definitions:

Net income generally is determined by subtracting your total expenses from your total income to determine how much money you have to spend.

Free cash flow is the amount of cash you have available for discretionary spending after you have set aside the portion of your net income for future obligations (e.g. loan payments, owner draw, etc.).

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