Cash left from operations after paying for capital investment, with margin, conversion and yield.
Shown in brackets in the cash flow statement — enter it as a positive number.
Example Result
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Estimates for planning only; not financial, tax or investment advice. See our Disclaimer.
Profit is an accounting result; free cash flow is money. It starts from cash generated by operations — after paying suppliers, staff, interest and tax, and after the cash tied up in receivables and inventory — and subtracts the cash spent on long-lived assets such as equipment, buildings and software. What is left can repay debt, pay dividends, buy back shares or fund acquisitions. Enter operating cash flow and capital expenditure from the cash flow statement; add revenue, net income and market capitalisation to get FCF margin, FCF conversion and FCF yield. The guide below shows where each number sits in the statement, works through three companies, and explains why the same FCF figure means different things to a lender and to a shareholder.
Enter "net cash provided by operating activities" from the cash flow statement.
Enter purchases of property, plant and equipment as a positive number.
Optionally add revenue, net income and market capitalisation, then press Calculate.
By O.E. — Partner, chairman of the board and CEO of a metal products manufacturer for 21 years; the company exports to 45 countries.
Drafted with AI assistance; calculations checked against primary sources and tested with the site's own code. About FlowUtil
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Operating cash flow is "net cash provided by operating activities", the bottom of the first section of the cash flow statement; it can be negative. Capital expenditure is "purchases of property, plant and equipment" (plus capitalised software, if shown separately) in investing activities — shown in brackets as a negative, entered here as a positive number. The calculator does not use acquisitions, asset sales or financing flows; companies that report their own "free cash flow" may include some of these, so read their definition.
| Symbol | Meaning |
|---|---|
| FCF | Operating cash flow − Capital expenditure |
| FCF margin | FCF ÷ Revenue |
| FCF conversion | FCF ÷ Net income (not meaningful for a loss) |
| FCF yield | FCF ÷ Market capitalisation |
1OCF $500,000, capex $120,000, revenue $2.0M, net income $350,000, market cap $5.0M.
500 − 120; 380 ÷ 2,000; 380 ÷ 350; 380 ÷ 5,000
FCF $380,000 · margin 19.00% · conversion 108.57% · yield 7.60%
Conversion above 100%: the business turned more than its reported profit into spare cash, common when depreciation exceeds capital spending.
2OCF $1.2M, capex $450,000.
1,200 − 450
FCF $750,000
Capex is 37.5% of operating cash — typical where machines and networks must be replaced continuously.
3OCF $200,000, capex $350,000, revenue $1.5M.
200 − 350
FCF −$150,000 · margin −10.00%
Not automatically a warning: a company building capacity spends cash before the revenue arrives. The question is whether the capex is maintenance or growth — and operating cash flow itself is positive.
The US SEC staff, which reviews how listed companies present the measure, notes that free cash flow has no uniform definition and should not be presented as cash available for discretionary spending, because many companies have mandatory debt repayments and other commitments that are not deducted. It also says free cash flow is a liquidity measure that must not be presented on a per-share basis in SEC filings. For shareholders, subtract required debt repayments to see what could be paid out; for valuation on enterprise value, analysts use free cash flow to the firm (before interest, after tax on operating profit); and over one year FCF swings with the timing of large projects, so look at three to five years.