What is free cash flow in one sentence?
The cash a business generates after paying to keep the lights on and the machines running.
Is FCF a GAAP measure?
No. FCF is a derived metric; the inputs (OCF and CapEx) are GAAP, but FCF itself is non-GAAP and subject to SEC C&DIs on non-GAAP measures.
Should SBC be subtracted from FCF?
Damodaran says yes (dilution is a real cost). GAAP convention adds it back. Publish both readings.
Why is FCF not appropriate for banks?
Bank deposits and loans flow through operating activities; the OCF figure is dominated by balance-sheet movements, not trading margin. Use RoTE or dividend discount instead.
What is a good FCF yield in 2026?
Mature defensives clear 5%. Mature platform tech sits at 2-4%. High-growth SaaS often sits below 2%. Use Damodaran sector medians as a benchmark.
What is the difference between FCFF and unlevered FCF?
In textbooks they are synonyms. In practice some analysts reserve FCFF for the lease-aware version under ASC 842.
Which tax rate do I use in FCFF?
The effective rate from the income statement, not the statutory 21%. For forward-looking models a defensible marginal rate.
Do I include capitalised software in CapEx?
Yes if it is material (mid-cap SaaS, integrated banks). Some filers split the line; some bundle it with PP&E purchases.
Are acquisitions CapEx?
No. Acquisitions sit in investing on a separate line. Standard FCF ignores them; owner-earnings frameworks may include tuck-ins if they replace R&D.
Why does FCF often exceed net income?
D&A above replacement CapEx, working-capital release, or deferred revenue building. Common for asset-light platform firms.
Why does FCF persistently below net income suggest a problem?
Aggressive revenue recognition under ASC 606, receivables build outpacing sales, or capitalising costs that competitors expense.
Should I use trailing or forward FCF for FCF yield?
Trailing for comparing investment opportunities. Forward (normalised) for modelling.
What discount rate pairs with FCFF in a DCF?
WACC. Pairing FCFF with cost of equity is the most common DCF error.
How should I treat operating-lease principal in FCF?
Under ASC 842 it sits in OCF; Standard FCF captures it. Finance-lease principal sits in financing; subtract it for an all-in figure.
What is owner earnings?
Buffett 1986 reformulation: reported earnings + D&A + other non-cash - average maintenance CapEx.
Why does Snowflake report two FCF figures?
GAAP FCF and non-GAAP adjusted FCF. The wedge is SBC (and employer payroll taxes on SBC). SEC C&DIs constrain how the non-GAAP figure can be presented.
Can I export this calculator to Excel?
Yes. The XLSX export is ungated and does not require an email. See /tools/xlsx-export.
Why does the site avoid em-dashes?
House style. Hyphens or commas only; the rule keeps the working-paper voice consistent and AI-generation tells out of the prose.
Source primer for these answers: Damodaran NYU[Damodaran], FASB ASC 230[ASC 230], SEC C&DIs on non-GAAP[SEC C&DIs].