How do I calculate free cash flow?
Asked 4 years ago
So I have a fairly new business that I'm learing to run, but it's taking a while. I find myself in the position where I need to do all sorts of financial projections. However, I'm a bit stuck on how to work out free cash flow?
Gareth Browne
Thursday, November 11, 2021
Free Cash Flow (FCF) has two formulae, one for calculating investments and the other for calculating net investment in operating capital.
Free cash flow = sales revenue - (operating costs + taxes) - required investments in operating capital.
Free cash flow = net operating profit after taxes - net investment in operating capital.
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