💸 Cash Flow Calculator
Calculate operating cash flow and free cash flow from business income and expenses.
Operating Cash Flow vs Free Cash Flow
Operating Cash Flow (OCF) = Revenue − COGS − Operating Expenses. It shows cash generated from core business operations. Free Cash Flow (FCF) = OCF − Capital Expenditures. FCF is what's available after maintaining and growing assets — it's the truest measure of financial health and what can be returned to investors or reinvested.
Why Cash Flow Matters More Than Profit
A business can show accounting profit but still run out of cash due to timing mismatches (slow-paying customers, inventory buildup). Conversely, a business can have negative profit but positive cash flow due to depreciation. Investors and lenders scrutinize cash flow more than net income because cash pays the bills.
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FCF margin = FCF ÷ Revenue. Tech/SaaS companies target 20–30%+ FCF margin at scale. Industrial companies typically achieve 5–15%. A consistently positive FCF margin — even if modest — indicates a fundamentally sound business. Negative FCF is acceptable during high-growth phases but must eventually turn positive.
Profit (net income) is an accounting concept that includes non-cash items like depreciation and amortization. Cash flow tracks actual money moving in and out. A company can be profitable but cash-flow negative if customers pay slowly, or cash-flow positive but technically unprofitable due to large depreciation charges.