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Finance / July 7, 2018 / Isabella Mccray

Cumulative interest is the sum of all interest payments made on a loan over a certain time period. On an amortizing loan, cumulative interest will increase at a decreasing rate, as each subsequent periodic payment on the loan is a higher percentage of the loan’s principal and a lower percentage of its interest.

FCF measures the level of cash available to a company's investors net of all required investments in working capital and fixed capital, including plant, property and equipment, otherwise known as capital expenditures, plus any expenses required to remain a going concern. FCF is an important measure because it allows a company to pursue opportunities that enhance shareholder value. Excess cash can expand production, develop new products, make acquisitions, pay dividends and reduce debt.

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