Free Cash Flow Calculator
Enter operating cash flow and capital expenditures for the same period to find the cash a business has left after investing in its assets.
Updated
Free Cash Flow Calculator
Our Free Cash Flow Calculator shows how much cash a business has left after paying for its operations and the assets it needs to keep running and growing. Enter operating cash flow and capital expenditures from the cash flow statement. It subtracts one from the other and shows how much of the operating cash went into assets. It is built for business owners, investors, analysts, founders and finance students.
Quick answer
Free cash flow is operating cash flow − capital expenditures: 450,000 − 120,000 = 330,000 of cash left for debt repayment, dividends, buybacks or savings.
- Meaning: cash left after running the business and investing in its assets.
- Positive: the business funds its own investment and has cash to spare.
- Negative: it spent more on assets than operations brought in, common in fast growth.
- Source: both inputs come from the cash flow statement for the same period.
What Is Free Cash Flow?
Free cash flow (FCF) is the cash a business generates from its normal operations after paying for capital expenditures (CapEx): purchases of property, equipment, vehicles and technology that last more than a year.
− Capital expenditures
Unlike net income, it is built from real cash movements, so it shows what the business can actually spend on paying down debt, paying dividends, buying back shares or building reserves without new borrowing. A company can report a profit and still have negative free cash flow if it is investing heavily or has cash tied up in stock and receivables.
How to Calculate Free Cash Flow
= 330,000
- Find operating cash flow. "Net cash from operating activities" on the cash flow statement.
- Find capital expenditures. "Purchases of property, plant and equipment" in the investing section, usually shown in brackets.
- Use the same period. Both figures must cover the same quarter or year.
- Subtract. Operating cash flow minus CapEx is free cash flow.
Free Cash Flow Examples
Manufacturer. Operating cash flow 350,000, capital expenditures 125,000:
= 225,000
About 64.29% of operating cash is free, enough to buy a new machine or pay down debt without borrowing.
Consulting firm. Operating cash flow 120,000, capital expenditures 20,000 (laptops and office fit-out):
= 100,000
With few physical assets, over 83% of operating cash is free for hiring or owner distributions.
Expanding retailer. Operating cash flow 80,000, capital expenditures 150,000 on two new stores:
= −70,000
Negative free cash flow, funded from savings or borrowing. That is fine for a planned expansion, but not year after year.
| OCF − CapEx | FCF |
|---|---|
| 120,000 − 20,000 | 100,000 |
| 500,000 − 300,000 | 200,000 |
| 350,000 − 125,000 | 225,000 |
| 450,000 − 120,000 | 330,000 |
| 80,000 − 150,000 | −70,000 |
Interpreting Free Cash Flow
| FCF | General reading |
|---|---|
| Strongly positive | Healthy cash generation and room to choose |
| Slightly positive | Stable, little cash to spare |
| Near zero | Tight, needs careful cash management |
| Negative | Heavy investment or cash strain |
One year rarely tells the story. Look at the trend over several years and at why it moved: a new factory can push FCF below zero for a year, while falling operating cash flow is a more serious warning. Software and service firms with little equipment tend to turn most operating cash into FCF, while utilities and manufacturers spend much more on CapEx.
FCF vs Other Cash Metrics
| Metric | What it shows |
|---|---|
| Operating cash flow | Cash from day-to-day operations |
| Free cash flow | Operating cash after CapEx |
| Net income | Accounting profit, includes non-cash items |
| EBITDA | Earnings before interest, tax, depreciation and amortisation |
This calculator gives simple free cash flow. Levered free cash flow also subtracts debt repayments and is what is left for shareholders. Unlevered free cash flow is worked out before interest and is what is left for all investors, and it is the figure used in discounted cash flow (DCF) valuation.
Common Mistakes
- Using net income instead of operating cash flow. Net income includes non-cash items like depreciation.
- Leaving out maintenance CapEx. Spending to keep existing assets running counts too, not just growth projects.
- Entering CapEx as a negative. The cash flow statement shows it in brackets; enter it here as a positive amount.
- Mismatched periods. A year of operating cash flow minus one quarter of CapEx overstates FCF.
- Judging one year alone. Big investments are lumpy, so read FCF over several years.
Key Terms
- FCF
- Free cash flow: operating cash flow minus capital expenditures.
- Operating cash flow
- Net cash from operating activities on the cash flow statement.
- CapEx
- Capital expenditures: spending on long-lived assets.
- Levered FCF
- Free cash flow after debt payments, left for shareholders.
- Unlevered FCF
- Free cash flow before interest, used in DCF valuation.
How to Use the Free Cash Flow Calculator
- Enter operating cash flow. Type net cash from operating activities for the period, such as 450,000. A negative value is allowed.
- Enter capital expenditures. Type spending on property, plant and equipment for the same period as a positive amount, such as 120,000.
- Read and copy the result. Free cash flow appears as you type, with the working and the share of operating cash flow that went to CapEx and stayed free. Press Copy to copy it, or Clear or Esc to start again.
Example: operating cash flow 350,000 and capital expenditures 125,000. Free cash flow is 350,000 − 125,000 = 225,000, so about 64.29% of the operating cash is left after investing in assets.
Who Can Use This Calculator?
Frequently Asked Questions (FAQs)
How do you calculate free cash flow?
Subtract capital expenditures from operating cash flow for the same period. Free cash flow = operating cash flow − capital expenditures.
What is the free cash flow if operating cash flow is 450,000 and CapEx is 120,000?
Free cash flow is 330,000. 450,000 − 120,000 = 330,000, so about 73.33% of operating cash flow is left after capital spending.
Can a profitable business have negative free cash flow?
Yes. Profit includes non-cash items and ignores asset purchases, so a business that is investing heavily or has cash tied up in stock and receivables can show a profit with negative free cash flow.
Is negative free cash flow always bad?
No. It is normal for a growing business that is investing in new capacity. It becomes a concern when it lasts for years or comes from falling operating cash flow rather than planned investment.
Should capital expenditures include maintenance spending?
Yes. Include spending to maintain and replace existing assets as well as new purchases. Leaving out maintenance CapEx overstates free cash flow.
Where do I find operating cash flow and CapEx?
Both are on the cash flow statement. Operating cash flow is net cash from operating activities, and CapEx is usually the purchases of property, plant and equipment line in the investing section.
What is the difference between free cash flow and levered free cash flow?
Free cash flow here is operating cash flow minus CapEx. Levered free cash flow also subtracts debt repayments, so it shows the cash left for shareholders only.
Is the Free Cash Flow Calculator free?
Yes. It is completely free, needs no sign-up, and can be used as many times as you like.
Sources
- Corporate Finance Institute. Free Cash Flow (FCF).
- Corporate Finance Institute. Operating Cash Flow.
- AccountingTools. The difference between cash flow and free cash flow.
- Wikipedia. Free cash flow.
- Wikipedia. Capital expenditure.
Try our Free Cash Flow Calculator to see how much cash your business truly generates in seconds.