CompanyGraph
Free cash flow is useful because it connects operations with capital spending. It is also easy to flatter for one year by releasing working capital or postponing investment.
What is free cash flow?
CompanyGraph derives free cash flow as operating cash flow minus the absolute value of capital expenditure. That simple definition is comparable inside the screener, but it is not a complete measure of distributable cash. It does not separate maintenance from growth capex, and operating cash flow contains working-capital timing.
How does the free-cash-flow ratios screen work?
The FCF Ratios Elevated interpretation requires latest-annual free cash flow relative to assets, free cash flow relative to equity, and free cash flow relative to operating cash flow all to fire. The FCF/OCF observation is benchmarked against industry peers.
A match establishes three elevated current ratios under their configured mappings. It does not establish growth, persistence, maintenance-capex adequacy, or attractive valuation.
FCF Ratios Elevated
Three FCF ratios co-occur in their elevated ranges: FCF/total assets, FCF/total shareholders' equity, and industry-benchmarked FCF/OCF
What does the broader cash-flow screen add?
The Cash-Flow Ratios Elevated panel requires peer-relative trailing-twelve-month operating-cash-flow margin, peer-relative annual FCF/OCF, and annual operating cash flow relative to sales in the upper portion of a 0% to 30% mapping.
This combines current cash generation from sales with retention after capex. Periods differ: one input is TTM vendor statistics and two use annual statements. A match is therefore a mixed-period snapshot, not a synchronized cash forecast.
Cash-Flow Ratios Elevated
Operating cash flow margin, FCF as a share of operating cash flow, and operating cash flow to sales are all in elevated ranges
How should you use free-cash-flow filters?
Start with FCF Ratios Elevated when the question is cash remaining after capex relative to the balance sheet. Add Cash-Flow Ratios Elevated when sales conversion also matters. CompanyGraph combines every required observation with AND logic. A zero result describes the currently evaluated universe and available inputs, not the absence of cash-generative companies.
What can temporarily inflate free cash flow?
Receivable collection, inventory liquidation, slower supplier payment, customer prepayments, lower taxes, and reduced provisions can lift operating cash. Deferring maintenance or expansion capex raises derived FCF today while transferring a physical requirement to a later period. Asset disposals normally sit outside operating cash, but classification and one-off items still require review.
How do you verify free-cash-flow quality?
Reconcile net income to operating cash across several annual periods and inspect each working-capital movement. IAS 7 provides the cash-flow statement framework. Compare capex with depreciation, asset age, capacity, maintenance disclosures, leases, and strategic projects.
Free cash flow is often presented as a non-GAAP measure with company-specific adjustments. The SEC's non-GAAP interpretations explain relevant presentation constraints for US issuers. Reconcile management's measure to the screener's derived definition rather than assuming the labels match.
What can a free-cash-flow screen not tell you?
The panels do not distinguish maintenance from growth capex, normalize working capital, show segment cash generation, assess debt maturities, or predict capital allocation. They also ignore stock-based compensation as a non-cash expense that can still dilute owners.
Use the screen to find candidates, then evaluate the operating process, reinvestment requirement, cash restrictions, balance sheet, per-share claims, and valuation. Strong current FCF is evidence; durable owner economics require more.