Free Cash Flow (FCF) Calculator
Calculate free cash flow by subtracting capital expenditures from operating cash flow.
Results
What is it?
Free Cash Flow (FCF) is the cash a company generates from operations after spending money to maintain or expand its asset base. It is arguably the most important measure of a business's financial health because it is harder to manipulate than earnings.
How to use
Enter operating cash flow (from the cash flow statement) and capital expenditures (CapEx) for the same period. FCF = Operating Cash Flow - CapEx.
Example scenario
Operating cash flow $800k and CapEx $200k: FCF = $600k. This is cash the company can use to pay dividends, buy back shares, reduce debt, or reinvest in growth.
Pro tip
Warren Buffett uses FCF (or "owner earnings") as a primary valuation input. A company with positive net income but negative FCF may be consuming cash faster than it earns it. Consistently positive and growing FCF is a hallmark of quality businesses. Compare FCF yield (FCF / Market Cap) to bond yields as a relative valuation tool.