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Abstract
The objective of this paper is to investigate the relationship between free cash flow and firm performance. The sample consists of non financial firms included in the S&P BSE 500 index from 2006 to 20016. The firms’ performance is measured by accounting performance which is measured by return on equity (ROE). The data were subjected to statistical analysis using correlation technique. The result of the study revealed that free cash flow as the independent variable has a significant and strong positive relation with firm performance. This study suggests the use of free cash flow in evaluating performance which will help investors make good decisions.