Free Cash Flow Calculator
Free cash flow is one of the most important financial metrics for evaluating a business's ability to generate sustainable wealth. Unlike earnings, which include non-cash items and are subject to accounting choices, free cash flow represents real dollars that can be returned to investors, used to pay off debt, or reinvested in growth. It is calculated as operating cash flow minus capital expenditures, and the resulting FCF margin (as a percentage of revenue) benchmarks the business's cash generation efficiency against peers. This calculator computes FCF, FCF margin, and FCF per share from your operating and investing cash flow data.
Free cash flow formula
FCF = Operating Cash Flow - Capital Expenditures
FCF Margin = FCF / Revenue * 100
FCF Per Share = FCF / Shares Outstanding
FCF margin benchmarks by industry
- Software / SaaS: 20 to 40% FCF margin (asset-light model).
- Financial services: 15 to 25% FCF margin.
- Healthcare: 10 to 20% FCF margin.
- Manufacturing: 3 to 8% FCF margin (high capex).
Free cash flow: frequently asked questions
What is free cash flow?
Free cash flow (FCF) is the cash a business generates after accounting for cash outflows to support and maintain its asset base. FCF = Operating Cash Flow - Capital Expenditures. It represents cash available to repay debt, pay dividends, buy back shares, or invest in growth.
Why is free cash flow more important than net income?
Net income includes non-cash charges (depreciation, amortisation) and can be manipulated through accrual accounting. Free cash flow is harder to manipulate and directly reflects actual cash generation, which is what matters for debt repayment and shareholder returns.
What is a good free cash flow margin?
FCF margin = FCF / Revenue. Software companies often achieve 20 to 40% FCF margins. Industrial businesses typically see 5 to 10%. A positive and growing FCF margin is a strong indicator of business health.
How does capex affect free cash flow?
Higher capital expenditure reduces free cash flow. Capital-intensive businesses (manufacturing, mining, telecoms) have much lower FCF relative to net income than asset-light businesses (software, consulting). Comparing FCF to net income reveals capex intensity.
What is levered vs unlevered free cash flow?
Unlevered FCF (UFCF) is calculated before interest payments, making it capital-structure neutral and useful for DCF valuation. Levered FCF is after interest payments, reflecting what is available to equity holders after all debt obligations are met.
Sources
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.