profitability
Tracked on R40
FCF% FCF Margin
Free cash flow as a percentage of revenue. Measures how efficiently a company converts sales into actual cash.
Formula
FCF Margin = (Free Cash Flow / Revenue) × 100
How to Interpret
Higher is better. A 20%+ FCF margin is excellent — the company keeps 20 cents of real cash for every dollar of revenue. Below 0% means the company is burning cash.
Why It Matters
Revenue means nothing if it doesn't convert to cash. FCF margin shows the quality of revenue — a company with $10B in revenue but negative FCF is less healthy than one with $1B in revenue and 30% FCF margin.
Example
A company with $250M in free cash flow and $1B in revenue has a 25% FCF margin ($250M ÷ $1B × 100). It keeps 25 cents of cash from every dollar of sales.