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Inside Exelon’s Free Cash Flow Trend

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Sep. 26 2017, Updated 6:38 a.m. ET

Free cash flow

Very few US utility companies (XLU) have recorded positive free cash flows recently. In 2016, Exelon’s (EXC) free cash flow was -$1.4 billion.

Free cash flow is a measure of the difference between a company’s cash flow that it makes from operations and its capital investments. These free cash flows are used by companies to pay for expansions, dividends, and acquisitions.

Exelon has been generating negative free cash flows for the past three years. Free cash flows are negative when the company’s capital investments exceed its cash flows from operations. Thus, large negative free cash flows could force a company to take on more debt financing.

You can read about Duke Energy’s (DUK) free cash flows in Market Realist’s series How Duke Energy Is Positioned for the Future Compared to Its Peers.

Continue to the next part of this series for a look at Exelon’s dividend profile.

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