How do I know if the free cash flow my company shows here is “good” or “healthy”?

Look at the FCF margin in the results. Roughly >15% is strong, 5–15% is moderate, and anything near or below 0% needs deeper analysis. Always compare with past years and peers because capital intensity varies by industry.

Why does this calculator offer both “Operating Cash Flow – CapEx” and “EBIT-based (NOPAT + adjustments)” methods?

The first method works when you have cash flow from operations available. The EBIT-based method rebuilds free cash flow from income-statement data (EBIT → NOPAT → add back D&A → adjust for working capital → subtract CapEx), which is how analysts compute FCFF in valuation.

Can free cash flow be negative and the business still be okay?

Yes. Fast-growing or capital-intensive companies often show negative FCF because they’re investing heavily. The real warning sign is persistent negative FCF without clear payoff or strategy.

How should I actually use the FCF result from this calculator in decisions?

Treat FCF as cash available for debt repayment, dividends, buybacks, or reinvestment. Track FCF and FCF margin over several years and compare with peers to judge financial strength and sustainability.

Free Cash Flow (FCF) Calculator – Operating Cash Flow Minus CapEx & EBIT-Based FCF

Free Cash Flow (FCF) Calculator

Calculate free cash flow (FCF) using either operating cash flow minus capital expenditures, or by deriving FCF from EBIT, tax rate, and working capital movements. Optionally compute FCF margin and FCF per share.

Method

Use cash flow from operations minus capital expenditures: FCF = Operating Cash Flow - CapEx.

Operating Cash Flow

EBIT (Operating Income)

Tax Rate

Depreciation & Amortization (D&A)

Change in Net Working Capital

Capital Expenditures (CapEx)

Revenue (optional, for margin)

Show FCF per share

Shares Outstanding

Free Cash Flow (FCF) $
FCF Margin %
FCF Health
Operating Cash Flow $
Capital Expenditures (CapEx) $
Revenue $
FCF per Share $
Depreciation & Amortization (D&A) $
Change in Net Working Capital $

What is Free Cash Flow?

Free cash flow (FCF) is the cash a company has left after funding its operating costs and capital expenditures. It matters because FCF drives valuation, capital allocation decisions, and overall financial strength — it’s the cash that fuels growth, reduces debt, or rewards shareholders.

Formula

Operating Cash Flow method

EBIT (NOPAT-based) method

FCF Margin

Example

Method 1 – Operating Cash Flow − CapEx

Operating cash flow: 350,000
CapEx: 150,000
Revenue: 2,000,000

Step 1:

Step 2:

Interpretation: A 10% FCF margin indicates solid cash generation after essential reinvestment.

Method 2 – EBIT-based (NOPAT + adjustments)

EBIT: 300,000
Tax rate: 25%
D&A: 80,000
Change in net working capital: 20,000
CapEx: 150,000
Revenue: 2,000,000

Step 1:

Step 2:

Step 3:

Step 4:

Interpretation: This reflects moderate free cash flow — generally enough to sustain reinvestment with limited distributions.

How to Use the Free Cash Flow Calculator

This tool computes free cash flow using either the direct cash-flow method or a valuation-style EBIT→NOPAT approach. Enter your inputs and the calculator reveals FCF, FCF margin, and a health indicator.

Choose the calculation method
- - Select Operating Cash Flow – CapEx if you have operating cash flow.
- Select EBIT-based (NOPAT + adjustments) if you’re starting from EBIT.
Enter the core inputs
- - For the OCF method: input Operating Cash Flow and CapEx.
- For the EBIT method: input EBIT, Tax Rate, D&A, Change in Net Working Capital, and CapEx.
Add revenue and optional per-share metrics
- - Enter Revenue to compute FCF margin:
- Toggle Show FCF per share (if needed) and complete any extra fields.
Review the results
- - Check Free Cash Flow (FCF), FCF Margin, and the FCF Health assessment.
- Inspect the breakdown rows to see what drives your FCF.
Interpret insights and test scenarios
- - Read the What It Means section for a quick quality assessment.
- Use the Scenarios feature to test different assumptions (CapEx, revenue, taxes, etc.).

Frequently Asked Questions

Look at the FCF margin in the results. Roughly >15% is strong, 5–15% is moderate, and anything near or below 0% needs deeper analysis. Always compare with past years and peers because capital intensity varies by industry.
The first method works when you have cash flow from operations available. The EBIT-based method rebuilds free cash flow from income-statement data (EBIT → NOPAT → add back D&A → adjust for working capital → subtract CapEx), which is how analysts compute FCFF in valuation.
Yes. Fast-growing or capital-intensive companies often show negative FCF because they’re investing heavily. The real warning sign is persistent negative FCF without clear payoff or strategy.
Treat FCF as cash available for debt repayment, dividends, buybacks, or reinvestment. Track FCF and FCF margin over several years and compare with peers to judge financial strength and sustainability.

Methodology & Sources

Bibliography

CFA Institute (Curriculum Team) (2025). Free Cash Flow Valuation — CFA Institute https://www.cfainstitute.org/insights/professional-learning/refresher-readings/2025/free-cash-flow-valuation
Accessed 2025-11-19
Multiple contributors (2025). Free Cash Flow — Wikipedia Foundation https://en.wikipedia.org/wiki/Free_cash_flow
Accessed 2025-11-19
Aswath Damodaran (2021). Earnings and Cash Flows: A Primer on Free Cash Flows — NYU Stern School of Business https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/FreeCF.pdf
Accessed 2025-11-19

Free Cash Flow (FCF) Calculator

Results

What It Means

What is Free Cash Flow?

Formula

Operating Cash Flow method

EBIT (NOPAT-based) method

FCF Margin

Example

Method 1 – Operating Cash Flow − CapEx

Method 2 – EBIT-based (NOPAT + adjustments)

How to Use the Free Cash Flow Calculator

Choose the calculation method

Enter the core inputs

Add revenue and optional per-share metrics

Review the results

Interpret insights and test scenarios

Frequently Asked Questions

Methodology & Sources

Bibliography

Other Calculators in Cash Flow & Liquidity

Discounted Cash Flow (DCF) Calculator

Working Capital Calculator