How to simply calculate the free cash flow?

Question

The simple way to calculate is to subtract a business's capital expenditures from its operating cash flow. free cash flow

free cash flow = operating cash flow - capital expenditures

I have got adbe's cash flow statement via https://stockanalysis.com/stocks/adbe/financials/cash-flow-statement/.

year                        2022
net income                  4756
depreciation & amortization 939
share-based compensation    1440
other operating activities  703
operating cash flow         7838
operating cash flow growth  8.41%
capital expenditures        -442
acquisitions                -126
change in investments       -2
investing cash flow         -570
share issuance / repurchase -6272
debt issued / paid          0
other financing activities  -553
financing cash flow         -6825
net cash flow               392
free cash flow              7396
free cash flow growth       7.47%
free cash flow margin       42.01%
free cash flow per share    15.74

We calculate with the data:

free cash flow in 2022 = operating cash flow  -  capital expenditures 
                       = 7838 - 442  
                       = 7396

But i found that the acquisitions is huge -126 ,why not subtract it (money already paid )?

free cash flow in 2022 = operating cash flow  -  capital expenditures - acquisitions
                       = 7838 - 442  -126
                       = 7396 -126
                       = 7270

Answer 1

Free Cash Flow is the cash earned/spent in order to continue operating and maintaining the business. It does NOT include M&A activities, dividends, or other more discretionary cash flow.

One way of thinking of FCF is that it's the cash that the company can choose how to spend - to grow the business (M&A), distribute to owners (dividends), or save.