Free Cash Flow Calculator
Cash Left Over After Keeping the Business Running
Net income can be flattered or depressed by non-cash accounting entries, but free cash flow strips those out and asks a more concrete question: after paying for the capital expenditures needed to maintain and grow operations, how much actual cash is left? It's the figure most valuation models discount to arrive at a company's worth, precisely because it's harder to manipulate than reported earnings. This calculator supports two equivalent starting points, depending on which figures you have on hand.
The Formula
FCF = Operating Cash Flow − Capital Expenditures
From net income:
FCF = Net Income + Depreciation & Amortization − Change in Working Capital − Capital Expenditures
Both paths should arrive at approximately the same figure for a given company and period — the operating cash flow method starts further down the cash flow statement, while the net income method rebuilds cash flow from the income statement up.
Where This Matters
- Discounted cash flow valuation — free cash flow, not net income, is the figure projected and discounted in most DCF models to estimate intrinsic company value.
- Dividend and buyback sustainability — a company paying out more in dividends and buybacks than it generates in free cash flow is funding shareholder returns from debt or cash reserves, not operations.
- Comparing earnings quality — a large, persistent gap between net income and free cash flow can flag aggressive revenue recognition or unsustainable working capital trends.
Worked Examples
| Method | Inputs | Free cash flow |
|---|---|---|
| Operating cash flow | $8,000,000 OCF − $2,000,000 CapEx | $6,000,000 |
| Net income | $5,000,000 NI + $1,200,000 D&A − $300,000 ΔWC − $1,500,000 CapEx | $4,400,000 |
How to Use This Calculator
- Choose your calculation method: from operating cash flow, or from net income.
- For the operating cash flow method, enter operating cash flow and capital expenditures.
- For the net income method, enter net income, depreciation and amortization, change in working capital, and capital expenditures.
- Select Calculate to get free cash flow.
Related Calculations
Use free cash flow with the Enterprise Value Calculator to build a valuation multiple, or discount projected free cash flows using the Net Present Value (NPV) Calculator.