FCF (Free Cash Flow)
- Created by
- Renato Passos, Eng. de Software
- Reviewed by
- Renato Passos, Eng. de Software
Last updated: Apr 18, 2026
Formula
FCFF
About this calculator
The Free Cash Flow (FCF) calculator is an essential tool for evaluating the financial health of a company. It calculates the cash flow available to investors and creditors after deducting all operating costs, taxes, and capital expenditures.
The formula used to calculate FCF is based on Earnings Before Interest and Taxes (EBIT), tax rate (T), depreciation and amortization (D&A), change in working capital (ΔWC), and capital expenditures (CapEx). This combination of factors provides a comprehensive view of a company's ability to generate cash.
FCF is a crucial indicator for investors, as it helps to understand a company's ability to pay dividends, make investments, and reduce debt. Additionally, it is an important metric for corporate management, as it aids in decision-making about investments and resource allocation.
It is worth noting that FCF can fluctuate significantly from one period to another due to changes in operating costs, capital investments, and market conditions. Therefore, it is essential to monitor FCF over time to obtain a more accurate picture of a company's financial health.
Frequently asked questions
What is Free Cash Flow (FCF)?
FCF is the cash flow available to investors and creditors after deducting all operating costs, taxes, and capital expenditures.
How is FCF calculated?
FCF is calculated using the formula: FCF = EBIT(1−T) + D&A − ΔWC − CapEx.
Why is FCF important for investors?
FCF is important because it helps to understand a company's ability to pay dividends, make investments, and reduce debt.
What affects a company's FCF?
FCF can be affected by changes in operating costs, capital investments, and market conditions.
How should I use FCF to evaluate a company's financial health?
You should monitor FCF over time to get a more accurate picture of a company's financial health and compare it with other financial metrics.