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Sectors

Capital-intensive industrials

By Oliver Wakefield-Smith, Founder, Digital Signet. Verified against primary filings; see /sources.
Sector caveat
Use a 5-year average of FCF, not trailing twelve months. Single-year FCF for an industrial is closer to noise than signal.

Estimating maintenance CapEx

Damodaran's practitioner heuristic[Damodaran]: set maintenance equal to D&A for a steady-state firm, then adjust for inflation in equipment prices. Alternatively, isolate a flat-unit-volume year and take that year's CapEx as the maintenance baseline.

Working-capital seasonality

Heavy-equipment makers carry inventory builds ahead of the spring sales season. Receivables peak after Q4 dealer-channel orders. The Q1 cash flow statement is nearly always the worst-looking quarter, irrespective of trailing twelve-month health.

See also