Cash Flow Ratios¶

Cash flow ratios are among the most reliable financial metrics because cash is harder to manipulate than accrual-based earnings.

Free Cash Flow¶

`free_cash_flow`¶

free_cash_flow(operating_cash_flow, capex) -> float | None

Formula: OCF − CapEx

`fcf_margin`¶

fcf_margin(fcf, revenue) -> float | None

Formula: FCF / Revenue. FCF margin > 15% is considered excellent.

`fcf_yield`¶

fcf_yield(fcf, market_cap) -> float | None

Formula: FCF / Market Cap. FCF yield > 5% is often considered attractive.

`fcf_conversion`¶

fcf_conversion(fcf, net_income) -> float | None

Formula: FCF / Net Income. Values close to 1.0 indicate earnings are cash-backed. >1.0 means cash exceeds earnings (often positive); <0.5 is a warning sign.

Owner Earnings¶

`owner_earnings`¶

owner_earnings(net_income, depreciation, capex, working_capital_change=0) -> float | None

Formula: Net Income + D&A − CapEx ± ΔWorking Capital. Buffett's preferred measure of normalised cash generation.

`dcf_2_stage`¶

dcf_2_stage(
    fcf, growth_rate_stage1, growth_rate_stage2,
    wacc, stage1_years=5, terminal_growth=0.03
) -> float | None

See Scenario DCF for full documentation.

TypeScript¶

import { freeCashFlow, fcfMargin, fcfYield, fcfConversion } from 'fin-ratios'

freeCashFlow({ operatingCashFlow: 80e9, capex: 8e9 })    // 72e9
fcfMargin({ freeCashFlow: 72e9, revenue: 300e9 })         // 0.24
fcfYield({ freeCashFlow: 72e9, marketCap: 3e12 })         // 0.024
fcfConversion({ freeCashFlow: 72e9, netIncome: 65e9 })    // 1.108

Cash Flow Ratios¶

Free Cash Flow¶

free_cash_flow¶

fcf_margin¶

fcf_yield¶

fcf_conversion¶