How do you calculate Free Cash Flow?

cash flow
John W asked:


I like the arguement that P/E and PEG may not be a great predictor of worth. I would like to look into Free Cash Flow; but I don’t understand how to calculate and how to value based on any calculations.

Buster Okelberry
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2 Responses to “How do you calculate Free Cash Flow?”

  • walt17jr:

    The cash flow capital expenditures there are more detailed formulas but remember that it excessive weight in your analysis.

  • jeff410:

    Free Cash Flow =

    Net Income

    +Depreciation and Amortization
    -Change in working capital (change in current assets – current liabilities)
    -Capital Expenditures

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