Accounting & Finance
Free cash flow
Operating cash flow after the cash needed to replace and extend fixed assets.
The Formula
FCF = OCF - capital expenditure
Operating cash flow after the cash needed to replace and extend fixed assets.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| FCF | Free cash flow | currency | Cash left after capital spending. |
| OCF | Operating cash flow | currency | Cash generated by trading. |
| CapEx | Capital expenditure | currency | Cash spent on long lived assets. |
What Each Symbol Means
FCFcurrency
Free cash flow
Cash left after capital spending.
OCFcurrency
Operating cash flow
Cash generated by trading.
CapExcurrency
Capital expenditure
Cash spent on long lived assets.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate cash flow page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Cash Flow, filed under Business. Every number the guide produces comes from substituting into this one line.