A company can report solid accounting profit while generating little or negative free cash flow if it’s spending heavily on capital equipment — free cash flow is what’s actually left over.
How it works
Operating cash flow minus capital expenditures leaves free cash flow — the cash a business could return to owners or use to pay down debt without hurting its ability to keep running. Dividing by revenue gives the FCF margin, useful for comparing companies of different sizes.
What this does not include
This uses the simplest common formula (operating cash flow minus capex) — some analysts also subtract mandatory debt repayments or dividends to get a narrower “levered” free cash flow figure this calculator doesn’t compute.
How to use this calculator
- Enter operating cash flow and capital expenditures.
- Optionally enter revenue to see the FCF margin.
Frequently asked questions
Can free cash flow be negative?
Yes — if capital expenditures exceed operating cash flow, reported here as a real negative figure rather than floored at zero, since it’s an important signal, not an error.
Why not just look at net income?
Net income includes non-cash items like depreciation and can be affected by accounting choices — free cash flow tracks actual cash generated and spent, which is harder to dress up.
What’s a healthy FCF margin?
It varies widely by industry and business maturity — a fast-growing company reinvesting heavily may show a low or negative FCF margin by design, not by distress.
