FCF margin
Free cash flow as a share of revenue: how many cents of cash each dollar of sales leaves.
Worked example · a round-number company
Free cash flow$1.0B÷Revenue$5.0B=FCF margin20.0%How to read it
↑Higher is better. Each point is one more cent of cash per dollar of sales.
Example Co. 20.0%
Under 0%0% to 20%Over 20%
Below 0% the business burns cash; above 20% is very strong.
Keep in mind
- Young, fast-growing companies often run negative on purpose while they invest.