Free Cash Flow Calculator
Calculate FCF from operating cash flow and capital expenditures.
By Konstantin Iakovlev · Updated September 2026 · Source: SBA — Business Guide
Free Cash Flow
$350,000.00
FCF Margin
17.50%
FCF Breakdown
| Operating Cash Flow | $500,000.00 |
| Capital Expenditures | ($150,000.00) |
| Free Cash Flow | $350,000.00 |
Use the Free Cash Flow Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.
Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.
How It Works
Free cash flow (FCF) measures the cash a company generates once it has covered the capital spending needed to keep the business running. That leftover cash is what management can actually put to work: paying down debt, funding dividends, buying back shares, or reinvesting in growth.
The arithmetic is straightforward. Subtract capital expenditures (CapEx) from operating cash flow (OCF), and the remainder is free cash flow. Operating cash flow captures the cash thrown off by the company's core operations, before any non-operating items or investment outlays. Capital expenditures are the dollars spent acquiring, upgrading, and maintaining physical assets such as property, industrial buildings, and equipment.
Pull your operating cash flow and capital expenditure numbers straight from the cash flow statement, and use the most current figures available. Be careful not to read FCF as a stand-in for net income; the two diverge, and free cash flow gives a more honest view of liquidity and a firm's real ability to generate cash. One caveat worth keeping in mind is that any single year can be distorted by timing or one-off events, so weigh the trend across several periods rather than a lone data point.
Example: Tech Innovators Inc. (Latest Fiscal Year)
- 1 Step 1: Enter Operating Cash Flow and Capital Expenditures from the cash flow statement. For Tech Innovators Inc.'s latest fiscal year, Operating Cash Flow was $1,500,000,000 and Capital Expenditures were $350,000,000. Enter revenue of $6,000,000,000 in the optional Revenue field, which starts out filled with $2,000,000, to get a meaningful FCF margin.
- 2 Step 2: Calculate Free Cash Flow. Using the formula: Free Cash Flow = Operating Cash Flow - Capital Expenditures. So, $1,500,000,000 - $350,000,000 = $1,150,000,000.
- 3 Step 3: FCF Margin = $1,150,000,000 / $6,000,000,000 × 100 = 19.17%.
- 4 Step 4: Interpret the Result. A positive FCF of $1.15 billion means Tech Innovators Inc. generated substantial cash after covering its operating and capital spending needs, leaving room for dividends, debt reduction or expansion. Check the trend over several years before leaning on a single year's figure.
Source: SBA — Business Guide · Last updated: September 2026
Frequently Asked Questions
Why is free cash flow more important than net income?
What is the formula for free cash flow?
What is a healthy free cash flow margin?
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