Capex-to-Free-Cash-Flow Coverage Calculator
Free cash flow is definition-sensitive. Keep operating cash flow and capex periods consistent and investigate what the spending actually buys.
What it calculates
Rapid investment can coexist with strong operating cash flow while still compressing free cash flow. This calculator subtracts capital expenditure from operating cash flow, measures capex as a share of revenue, and compares current capex with the prior period.
How this capex-to-free-cash-flow coverage calculator works
The model uses the common simplified definition of free cash flow: operating cash flow minus purchases of property and equipment. It then compares capex with revenue and the prior period.
Formula
Free cash flow = operating cash flow − capital expenditure
One period can be distorted by working capital, project timing, acquisitions, or delayed payments. Free cash flow is not a substitute for a full cash-flow analysis.
Primary specifications
Before you use the result
Assumptions
- • All figures cover the same reporting period and currency unit.
- • Capex uses a consistent filing line or company reconciliation.
- • Acquisitions, leases, asset sales, and stock compensation are not automatically adjusted.
Quick start
- 1. Take revenue, operating cash flow, and capex from source filings.
- 2. Confirm whether management’s adjusted FCF definition differs.
- 3. Compare several periods and connect spending with capacity, depreciation, and required returns.
Inputs and units
| Input | Unit | Default |
|---|---|---|
| Revenue | US$ millions | $100B |
| Operating cash flow | US$ millions | $30B |
| Current capex | US$ millions | $20B |
| Prior-period capex | US$ millions | $14B |
Worked example (hypothetical)
Capex-to-Free-Cash-Flow Coverage Calculator: worked example
Hypothetical example using the calculator's default inputs. The numbers are illustrative, not a forecast or a quote.
| Revenue | $100B |
|---|---|
| Operating cash flow | $30B |
| Current capex | $20B |
| Prior-period capex | $14B |
| Free cash flow | $10B |
|---|---|
| Capex as % of revenue | 20.00% |
| Capex growth | 42.86% |
With these inputs, the free cash flow is $10B.
Frequently asked questions
Is free cash flow always operating cash flow minus capex?
That is a common definition, but companies and analysts may adjust additional items. Compare definitions before comparing firms.
Is high capex bad?
Not necessarily. It can create valuable capacity, but returns depend on utilization, pricing, useful life, financing, and competitive response.
Why compare capex with revenue?
The ratio is a simple measure of capital intensity, although business models and investment cycles differ.
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