 Free cash flows is the amount of cash available from operating activities after paying for capital assets expenditures and dividends. It's called free because it isn't designated for any particular purpose and can be used if a good investment becomes available. Free cash flows is a measure of liquidity. The formula is net cash flows from operating activities minus cash payments for capital expenditures minus cash dividends. Here's a condensed statement of cash flows from a sample company. We'll use the highlighted information to determine the free cash flows. Net cash flow from operating activities is $1,500. From that we subtract 800 for the cash paid for capital expenditures and 100 for cash paid for dividends resulting in 900 of free cash flows.