Free Cash Flow Score (FCF Score) is an indicator that is calculated by combining Free cash flow growth with free cash flow stability.
It thus gives you a combined indication of free cash flow quality.
How the FCF Score is calculated
(Three year free cash flow growth X 0.7) – (Variability of quarterly free cash flow over the past 3 years X 0.3)
The FCF Score is thus consists of 70% Free cash flow Growth and 30% Free cash flow Quality
How to use the ratio
Available as a screening ratio: Yes
Available as an output column ratio: No
The higher the better
The higher the value the better as it means free cash flow growth is high or the variability of free cash flow is low or both.
Use the FCF Score along with Free cash flow yield and / or when you are looking for stable high dividend yield companies, as a high FCF Score will ensure a company has the cash to maintain a high dividend pay-out.
Click here to start using the FCF Score in your portfolio NOW!