Free cаsh flоw (FCF) аnd net incоme (NI) differ in the fоllowing wаys: 1) Net income accrues to shareholders, calculated after interest expense; free cash flow is calculated considering all investor cash flows. 2) Net income is calculated after various noncash expenses, including depreciation; FCF adds back depreciation. 3) Capital expenditures and investments in working capital do not appear in net income calculations; they do reduce free cash flows. 4) Net income is never negative; free cash flows can be negative for rapidly growing firms, even if the firm is profitable, because investments can exceed cash flows from operations.