Free cash flow margin

What is the Free cash flow margin?

The Free cash flow margin is the ratio of Free cash flow to Total revenue.

Formula:

Free cash flow margin = Free Cash Flow / Total Revenue

What does Free cash flow margin mean?

The Free cash flow margin is a measure of how efficiently a company converts its sales to cash. The higher the percentage, the more cash is available from sales. A company that shows an increasing cash flow margin from year to year is certainly getting stronger with time. This is a good indicator of its probability for long-term success.