Free Cash Flow Calculator

Background.

Profit and cash part ways the moment a business buys something that lasts. The income statement spreads the cost of a new delivery van or production line over years through depreciation; the bank account pays for it on the day it arrives. A company can report healthy earnings and still be short of cash, and free cash flow is the measure that shows the difference: the cash its operations brought in, minus what it had to spend on the long-lived assets that keep those operations running.

What is left is the money a business can hand out or redeploy without borrowing or issuing shares — dividends, buybacks, paying down debt, buying another company, or simply building a cushion. That is why lenders and shareholders watch it so closely. A firm whose dividends run ahead of its free cash flow year after year is paying them from somewhere else, usually its cash reserves or new debt.

Both inputs come from the cash flow statement. Operating cash flow is the subtotal at the end of the operating activities section; capital expenditure sits in the investing section, usually labelled as purchases of property, plant and equipment, and is shown there in brackets as an outflow. Here it is entered as a positive amount and subtracted.

This is the simplest form of the measure, a single subtraction. It does not separate the spending needed to maintain existing assets from spending on expansion, so a company investing heavily in growth can show a negative figure for perfectly good reasons. Nor does it adjust for interest or borrowing to give the cash available specifically to shareholders or to all lenders and owners together — those are separate, more detailed definitions.

What is free cash flow calculator?

Free cash flow is the cash a business generates from its operations in a period after paying for capital expenditure, the purchases and upgrades of property, plant and equipment. It is computed from the cash flow statement rather than the income statement, so non-cash charges such as depreciation do not reduce it while actual spending on assets does. It is a non-GAAP measure: accounting standards do not define it, and companies that publish it may adjust it in their own ways.

How to use this calculator.

1. 01Enter operating cash flow as reported on the cash flow statement, often titled net cash provided by operating activities. If the business consumed cash in the period, enter the figure with a minus sign.
2. 02Enter capital expenditure as a positive number, taken from purchases of property, plant and equipment in the investing section. Leave out acquisitions of whole businesses and purchases of securities, which are not capital spending in the usual definition.
3. 03Make sure both figures cover the same period — one fiscal year, one quarter, or a trailing twelve months built by adding four quarters of each line.
4. 04Read the result alongside earlier years. Capital spending tends to come in lumps, so one weak year often says less than the trend across three or four.

The formula.

FCF = OCF − CapEx. OCF, operating cash flow, already starts from net income, adds back non-cash charges such as depreciation and amortisation, and adjusts for money tied up in or released from working capital — receivables, inventory, payables. CapEx is the cash spent acquiring or improving long-lived physical assets during the same period. There are no constants or rates in the formula, and the result carries the same currency and period as the inputs. Because FCF is what remains after a subtraction, it is more volatile than either input whenever capital spending is large: with operating cash of $140,000 and capex of $50,000, a 10% fall in operating cash cuts free cash flow by about 16%.

A worked example.

Frequently asked questions.

References& sources.

1. [1]OpenStax, Rice University. Principles of Finance, 2022. Chapters 6–10. Retrieved 2026-08-06.
2. [2]U.S. Internal Revenue Service. Tax guidance current 2026. Official forms, instructions and tax topics. Retrieved 2026-08-06.
3. [3]U.S. Securities and Exchange Commission. Investor.gov current 2026. Investment products and risk. Retrieved 2026-08-06.