Free Cash Flow Comparison

What This Free Cash Flow Comparison Measures

This page uses free cash flow as operating cash flow minus capital expenditure. The cached Quant Investing FCF result records that convention.

The IFRS Foundation's IAS 7 summary places operating cash flow within 3 formal activity classes. FCF is not one of those 3 classes, so the dashboard states its exact method rather than presenting it as a standardised IFRS subtotal.

Worked Example: B Leads by £20,000

Company A has £120,000 operating cash flow, £40,000 capital expenditure and £600,000 revenue. Its FCF is £80,000 and its FCF margin is 13.3%.

Company B has £150,000 operating cash flow, £50,000 capital expenditure and £700,000 revenue, giving £100,000 FCF and a 14.3% margin. B leads by £20,000, or 25.0% against A's £80,000 baseline, while both spend 33.3% of operating cash flow on capex.

Read the Drivers, Not Only the Winner

A £20,000 FCF lead can arise from stronger operating cash flow, lighter capital spending or both. In the worked example, B generates £30,000 more operating cash but spends £10,000 more on capex, leaving the £20,000 FCF difference.

The breakdown keeps those 2 movements visible so a lower-investment business is not mistaken automatically for a stronger operation.

Compare Like with Like

Use the same reporting length, currency basis and capex definition on both sides. Comparing a 6-month operating-cash figure with a 12-month figure makes the monetary result meaningless even though the calculator can subtract both.

GOV.UK's company-record guidance says records include money received and spent. Use consistent filed statements or underlying records rather than mixing cash and accrual figures.

Use Margins and Scenarios Carefully

FCF margin divides FCF by revenue, so £100,000 FCF on £700,000 revenue is 14.3%. It is unavailable at £0 revenue.

The scenarios reduce operating cash flow by 10%, raise capex by 10%, then combine both changes. These percentages are stress tests, not forecasts: for Company B, the combined case is £135,000 minus £55,000, leaving £80,000 FCF.

What Negative Free Cash Flow Does—and Does Not—Show

Negative FCF means capital expenditure exceeds operating cash flow under this formula. If operating cash is £40,000 and capex is £60,000, FCF is -£20,000. That one result does not show whether the £60,000 funded routine replacement, expansion or an exceptional project.

Compare the operating-cash row, capex load and more than 1 period before judging direction. A move from -£50,000 to -£20,000 is a £30,000 improvement, while a move from £10,000 to -£20,000 crosses from positive to negative even though both comparisons end at the same -£20,000.

Use FCF Margin to Compare Different Scales

The monetary lead favours larger businesses, so margin adds revenue scale. £10,000 FCF on £50,000 revenue is a 20.0% margin; £100,000 FCF on £2,000,000 revenue is 5.0%. The second business produces £90,000 more FCF but converts 15.0 percentage points less revenue into FCF.

A zero-revenue period still has a valid cash amount but no meaningful FCF margin. The dashboard shows “Not available” rather than dividing by £0 or presenting an infinite percentage.

Why Published Free Cash Flow Can Differ

Free cash flow is not a single IAS 7 line item. A company may exclude particular capital projects, include asset disposals or publish a different adjusted measure. This tool always uses operating cash flow minus capital expenditure so both sides follow one visible formula.

Sources

• IFRS Foundation — IAS 7 Statement of Cash Flows (formal cash-flow activity classes; repository evidence checked 2026-09-28)
• GOV.UK — Company and accounting records (money received and spent; repository evidence checked 2026-09-28)
• Quant Investing — Free Cash Flow (FCF) (FCF convention; cached SERP evidence checked 2026-09-26)