Free cash flow after capital expenditure, with capex shown as a share of operating cash flow — the cash genuinely left once the business has reinvested.
Cash from operations, and what reinvestment takes back
Cash the business generated and spent
$
Cash generated by core operations for the period.
$
Cash spent on property, plant, equipment
Free Cash Flow
$35,000
Operating cash flow left after capital expenditures.
Free cash flow is what survives after the business reinvests in its asset base. This bridge starts at operating cash flow, removes capital expenditure, and shows the remaining cash — plus how much of every operating-cash dollar is being plowed back as capex.
Line
Amount
Share of operating cash flow
Operating cash flow
$55,000
100.0%
Less: capital expenditures
-$20,000
36.4%
Free cash flow
$35,000
63.6%
Estimates only — not financial, tax, or professional advice.
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What it calculates: Free Cash Flow, Capex to Operating Cash Flow.
Updated 5 June 2026 · Transparent assumptions
Everything the business does that is not running or maintaining itself
$55,000 of operating cash flow less $20,000 of capital expenditure leaves $35,000. That is the cash genuinely available to repay debt, pay dividends, buy back shares, fund acquisitions or simply accumulate — after the business has paid its costs and reinvested in its own asset base.
It is the measure that is hardest to flatter. Net income responds to accounting choices, EBITDA ignores the cost of assets entirely, and operating cash flow can be lifted temporarily by stretching payables. Free cash flow subtracts the reinvestment that keeps the business running, which is why lenders, acquirers and valuation models lean on it more heavily than on any other single figure.
Maintenance capital keeps the business alive; growth capital makes it bigger
Capital expenditure of $20,000 consumes 36.4% of operating cash flow here. That ratio is one of the more revealing figures on this page: a business spending 80% of its operating cash on capex has very little discretion, while one spending 15% has a great deal.
The split inside capex matters more than the total. Maintenance capital expenditure — replacing worn equipment, keeping facilities functional — is not optional and is a genuine cost of continuing to operate. Growth capital buys new capacity and can be stopped. Companies rarely disclose the split, but a useful proxy is comparing capex against depreciation: spending consistently below depreciation suggests under-investment that will eventually have to be made up.
A company investing ahead of growth looks identical to one that cannot fund itself
Negative free cash flow means the business spent more on assets than it generated from operations, which is normal and often correct for a company building capacity into genuine demand. Retailers opening stores, manufacturers adding lines and infrastructure businesses all run negative for extended periods by design.
The distinction is whether the spending is producing returns. Negative free cash flow alongside rising revenue, stable margins and improving returns on capital is investment. The same figure alongside flat revenue and falling margins is a business consuming cash to stand still. The measure is identical; only the context separates them, which is why it should never be read as a single number.
Free cash flow has no single agreed formula
This uses the most common definition: operating cash flow less capital expenditure. Others subtract dividends, or treat acquisitions as capex, or compute free cash flow to the firm by adding back after-tax interest before subtracting capex. A figure quoted without its definition is not comparable to anything.
Two practical cautions. Capital expenditure is lumpy — a single year containing a factory purchase can turn a reliably cash-generative business negative, so judge the measure over three to five years rather than one. And acquisitions, which are excluded here, can be an alternative to organic capex: a company that buys capacity rather than building it will show flattering free cash flow while spending heavily elsewhere on the cash flow statement.
Sources & References
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
Results are estimates for planning and analysis based on the figures you enter. They are not accounting, tax, or financial advice — verify with your own records and a qualified professional before making decisions.
Published the calculator with its formula, worked example, assumptions, limitations and a bespoke guide, and added an automated formula test suite covering it.
Verified that free cash flow is operating cash flow less capital expenditure and that the capex ratio is measured against operating cash flow rather than revenue.
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