About the Free Cash Flow Calculator
Free cash flow (FCF) is the cash a business generates after paying for the capital expenditures needed to maintain and grow it — the money available for dividends, buybacks, debt repayment or acquisitions. This free cash flow calculator works out FCF three common ways: operating cash flow minus capital expenditures, net income adjusted for non-cash charges and working capital, or unlevered free cash flow to the firm (FCFF) from EBIT.
Investors use FCF because it is harder to flatter with accounting choices than earnings. Enter the share count and price to see FCF per share, the FCF yield (the cash return you would earn on the market value if all FCF were paid out) and the price-to-FCF multiple, and add revenue to see the FCF margin.
Enter all amounts in the same units, for example millions of dollars with shares also in millions, and use trailing twelve-month figures from the cash flow statement. Capital expenditures are entered as a positive number.
With the default inputs, the free cash flow is $8,500.00. Change any value above to recalculate instantly.
How to use the free cash flow calculator
- 1Choose a method: operating cash flow is quickest if you have the cash flow statement.
- 2Enter the figures in consistent units, with capital expenditures as a positive number.
- 3Enter shares outstanding and the share price for per-share figures and FCF yield.
- 4Add revenue to see the FCF margin.
- 5Compare FCF yield with bond yields and peers to judge valuation.
Formula and method
The simplest and most common definition takes cash flow from operations, straight from the cash flow statement, and subtracts capital expenditures (purchases of property, plant and equipment). Starting from net income instead, you add back non-cash depreciation and amortization and subtract the cash tied up in higher working capital.
Free cash flow to the firm (FCFF, or unlevered FCF) starts from after-tax operating profit, EBIT × (1 − tax rate), so it is before interest and belongs to both debt and equity holders; it is the cash flow used in a DCF valuation of enterprise value. FCF per share divides by shares outstanding, FCF yield divides FCF by market cap, and FCF margin divides by revenue.
- CFO
- Cash flow from operating activities
- Capex
- Capital expenditures
- D&A
- Depreciation and amortization
- ΔNWC
- Increase in net working capital
- t
- Tax rate
Worked examples
Operating cash flow minus capex ($ millions)
$12 billion of operating cash flow minus $3.5 billion of capex leaves $8.5 billion of free cash flow, or $8.50 per share. At a $120 billion market cap that is a 7.08% FCF yield, or 14.1× price to FCF.
From net income
Net income of $7 billion plus $2.5 billion of depreciation, minus a $0.5 billion working-capital increase and $3.5 billion of capex, gives $5.5 billion of FCF — a 4.58% yield.
Unlevered FCF from EBIT
EBIT of $10 billion taxed at 21% leaves $7.9 billion of after-tax operating profit. Adding D&A and subtracting the working-capital increase and capex gives $6.4 billion of free cash flow to the firm.
Cash-burning growth company
Capex of $1.2 billion exceeds the $850 million of operating cash flow, so FCF is −$350 million (−$4.38 per share). Price to FCF is not meaningful when FCF is negative.
Frequently asked questions
What is the free cash flow formula?+
The most common formula is cash flow from operations minus capital expenditures. Both numbers appear on the cash flow statement. Alternative formulas start from net income or EBIT and add back depreciation while subtracting working-capital increases and capex.
What is a good FCF yield?+
An FCF yield above the 10-year Treasury yield is often seen as attractive for a mature company, and 5–10% is common for value stocks. Fast-growing companies often have low or negative FCF yields because they reinvest heavily.
What is the difference between FCF, FCFE and FCFF?+
FCF usually means CFO minus capex, which is after interest. FCFE (to equity) also adjusts for net borrowing. FCFF (to the firm, unlevered) is before interest and is used to value the entire enterprise in a DCF.
Why can free cash flow differ a lot from net income?+
Net income includes non-cash items like depreciation and stock compensation and ignores cash spent on equipment and working capital. A company that is investing heavily or growing receivables fast can report profits while burning cash.
Should stock-based compensation be subtracted from FCF?+
Operating cash flow adds back stock-based compensation because it is non-cash, but it dilutes shareholders. Many analysts subtract it, or use a diluted share count, to avoid overstating FCF for tech companies.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.