Page Updated on September 20, 2026
Overview
Latest Free Cash Flow Margin measures the percentage of a company’s revenue that remains as free cash flow after accounting for capital expenditures.
Free cash flow represents cash generated from operations after subtracting the capital expenditures used to maintain or expand the business. The margin expresses that free cash flow relative to revenue, allowing companies of different sizes to be evaluated on a comparable basis.
Formula
For example, if a company reports $542.95 million in operating cash flow, $426.37 million in capital expenditures, and $3.68 billion in revenue, free cash flow is $116.58 million. This produces a Free Cash Flow Margin of approximately 3.17%.
How StockZuse Uses the Metric
StockZuse uses Latest Free Cash Flow Margin as a Business Quality metric within the ZuseScore.
The metric measures how much of a company’s revenue is converted into free cash flow after capital expenditures. A higher positive margin means that a larger portion of revenue remains as free cash flow.
Because free cash flow reflects both operating cash generation and capital spending, this metric complements revenue growth and accounting-based profitability measures elsewhere in the ZuseScore.
ZuseScore Point System
Latest Free Cash Flow Margin contributes a maximum of 14 points to the ZuseScore.
| Latest Free Cash Flow Margin | Points |
|---|---|
| 20% or more | 14 / 14 |
| 15% to less than 20% | 12 / 14 |
| 10% to less than 15% | 10 / 14 |
| 7% to less than 10% | 8 / 14 |
| 4% to less than 7% | 6 / 14 |
| 1% to less than 4% | 3 / 14 |
| 0% to less than 1% | 1 / 14 |
| Below 0% | 0 / 14 |
If matching annual operating cash flow, capital expenditure, and revenue data are unavailable, the metric is not scored.
Interpretation
A positive Free Cash Flow Margin indicates that operating cash flow exceeded capital expenditures during the period.
Higher margins indicate that a greater percentage of revenue remained as free cash flow after capital spending. Lower positive margins indicate that less revenue remained as free cash flow, while a negative margin indicates that capital expenditures exceeded operating cash flow.
Latest Free Cash Flow Margin should be considered together with the other ZuseScore metrics rather than interpreted in isolation.
Limitations
Free Cash Flow Margin can vary significantly between industries because businesses have different capital requirements. Capital-intensive companies may naturally have lower free cash flow margins than companies requiring relatively little investment in physical assets.
The metric can also fluctuate because of the timing of capital expenditures, changes in working capital, acquisitions, unusual operating cash flows, or other company-specific circumstances.
For this reason, StockZuse evaluates Free Cash Flow Margin alongside revenue growth, profitability, capital efficiency, financial leverage, and other financial metrics within the ZuseScore.
Data Used
StockZuse uses annual financial data from the same fiscal period:
Operating Cash Flow — cash generated by the company’s operating activities.
Capital Expenditures — capital spending used in the Free Cash Flow calculation.
Free Cash Flow — Operating Cash Flow minus Capital Expenditures.
Revenue — annual revenue for the corresponding fiscal period.
These are the same underlying values displayed in the Values Used section of Metric Detail.
Related Methodology
For information about how this metric combines with the other ZuseScore metrics, see ZuseScore Methodology.