About the FCF Calculator
Free cash flow is the money a company could hand to its investors without starving the operation. The everyday version is FCF = cash flow from operations - capital expenditure. Both figures come straight from the cash flow statement, which is why this measure resists the accruals and depreciation choices that shape reported earnings. Cash either moved or it did not.
Fill in the operating cash flow and the capital expenditure and the answer appears with its arithmetic. Two optional fields add context: revenue turns the answer into a margin, and the share count turns it into free cash flow per share, the figure that feeds a dividend cover or a price to free cash flow multiple. The reinvestment rate line shows what proportion of operating cash the business is ploughing back into equipment and property.
One caution about capital expenditure. Maintenance spending keeps the existing asset base alive, while growth spending buys new capacity, and cash flow statements rarely separate them. A company that is expanding hard can print a negative free cash flow for years and still be perfectly healthy, so read the number alongside the reason for it. Analysts building a valuation often prefer free cash flow to the firm, which starts from EBIT instead: the NOPAT Calculator handles the after tax operating profit that variant begins with.
How to use
- Copy cash flow from operations from the cash flow statement, not net income.
- Enter capital expenditure, usually shown as purchases of property, plant and equipment.
- Add revenue if you want the margin line, or leave it at zero to skip it.
- Add the share count for a per share figure you can compare with the dividend.
Common questions
- Is free cash flow the same as profit?
- No. Profit includes non cash charges and accrual timing, while free cash flow tracks money that actually entered or left the bank.
- Should acquisitions count as capex?
- Not in the standard definition. Acquisitions sit in investing activities but are treated separately because they buy whole businesses rather than maintain assets.
- What is a good FCF margin?
- It varies by industry. Software firms often clear twenty percent, while airlines and utilities run in low single digits because their asset base swallows cash.
- Why is my free cash flow negative?
- Either operations consumed cash or investment outran it. A fast growing company financing new capacity frequently shows this for several years.