Free Cash Flow Calculator
Calculate how much cash your business generates after all operating expenses and capital investments. Enter operating income, depreciation, taxes, working capital changes, and CapEx to find free cash flow and operating cash flow.
Free Cash Flow (FCF) represents the cash a business generates after accounting for all operating expenses and capital investments needed to maintain or grow the business. The formula is: FCF = Operating Income + Depreciation & Amortization - Taxes - Change in Working Capital - Capital Expenditures. FCF is widely considered the best measure of a company's financial health because it shows actual cash generation.
Unlike net income, which can be manipulated through accounting choices, free cash flow focuses on real cash movements. A company can report positive earnings while burning cash (if it has high CapEx or growing working capital requirements), or vice versa. This is why investors often value companies based on FCF rather than earnings.
FCF margin (FCF / Revenue) indicates how efficiently a company converts revenue into free cash. Software companies often have FCF margins of 20-40% due to low capital requirements, while manufacturers might see 5-10%. Consistent positive FCF gives a company the flexibility to pay dividends, buy back shares, reduce debt, or invest in growth opportunities.