1. Keep four figures separate
Record net income, cash from operations, capital expenditures or the company's capital-investment measure, and company-defined free cash flow. They can move together over time, but they answer different questions and must not be substituted for one another.
2. Bridge net income to operating cash
Review non-cash charges, receivables, contract assets, inventory, payables, deferred revenue, cash taxes, interest and disclosed special items. Identify the direction, stated cause and whether a driver may reverse rather than labelling every working-capital move as permanent.
3. Subtract reinvestment before calling cash available
Find the company's FCF definition and reconciliation. Distinguish recurring capital spending, acquisitions, commitments and financing proceeds. FCF does not automatically cover maturities, interest, leases, preferred claims or future reinvestment.
4. Add financing and allocation
Read debt notes and the financing section after the cash bridge. Positive FCF can coexist with equity issuance, refinancing, buybacks or acquisition spending. Those actions explain the cash path; they do not erase the underlying operating number.
5. Write a five-line evidence card
Record the CFO and FCF facts, largest disclosed driver, timing or reinvestment constraint, relevant capital claim and next cash-flow line item to check.