Free cash flow margin
Also known as: FCF margin
A margin is a profit number expressed as a percentage of . It tells you how many cents of each dollar the company keeps at a given point on the .
Free cash flow margin measures what percentage of is left as actual cash after the company has paid for the needed to maintain and grow the business. It answers the question: how much cash can the company actually distribute to shareholders or reinvest?
The formula is: / × 100 = Free cash flow margin ( - ) / × 100 = Free cash flow margin
High free cash flow margin means the business generates cash efficiently and requires little reinvestment to keep running. Low or negative free cash flow margin can signal a cash-hungry business or a company in heavy growth mode.