Free Cash Flow Calculator

Why use the free cash flow calculator?

Free cash flow calculator Free cash flow (FCF) is a financial metric that measures the amount of cash a company generates after accounting for capital expenditures. It is an essential indicator of a company's ability to create money, pay dividends, buy back shares, or make acquisitions. Investors can use the Free Cash Flow Calculator to determine how healthy a company's finances are and how much they could grow.

Where can you find free cash flow?

The free cash flow formula calculating free cash flow is:

FCF = Net Income + Depreciation - Capital Expenditures - Change in Working Capital

Net income is the company's income after accounting for all expenses and taxes. Depreciation is the non-cash expense that accounts for the decline in the value of a company's assets over time. Capital expenditures are the funds spent by a company on long-term investments such as real estate, plants, and equipment. The change in working capital is the difference in a company's current assets and liabilities from one period to another.

Example:

ABC Company has the following financial data:

Net income: $1,000,000

Depreciation: $200,000

Capital Expenditures: $300,000.

Change in Working Capital: $50,000

Using the formula above, we can calculate the free cash flow for ABC Company as follows:

FCF = $1,000,000 + $200,000 - $300,000 - $50,000

FCF = $950,000

This means that ABC Company has generated $950,000 in free cash flow in this period.

In conclusion, the Free Cash Flow Calculator is a helpful tool for investors to evaluate a company's financial health and potential for growth. The formula for free cash flow is net income plus depreciation minus capital expenditures minus the change in working capital. Using this calculator, investors can better understand a company's ability to generate cash and make strategic decisions such as dividends, buybacks, and acquisitions.