Calculate your operating cash flow, free cash flow, and cash runway — the metrics buyers, lenders, and investors actually use to evaluate a business.
Calculate operating cash flow, free cash flow, and cash runway — the metrics that matter most in M&A, lending, and business health assessment.
Our network includes M&A advisors, interim CFOs, and SBA lenders who help business owners improve cash flow — whether for operations, growth, or a sale. Free introduction.
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Revenue and profit tell part of the story. Cash flow tells the rest. A profitable business can still fail if cash flow is poorly managed — and a business with strong free cash flow is dramatically more valuable and easier to sell than one that isn't.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a measure of operating profitability. Free cash flow takes EBITDA and subtracts actual cash outflows: interest paid, taxes paid, capital expenditures, and working capital changes. FCF is what's actually available to distribute to owners or service debt.
EBITDA is easier to calculate consistently across businesses and strips out financing decisions (interest) and accounting choices (depreciation). Lenders use EBITDA for initial sizing, then use actual debt service coverage (DSCR) to stress-test the cash flow. FCF is more accurate but varies significantly based on capital expenditure timing and working capital cycles.
Five levers: increase revenue without proportional cost increases (operating leverage), reduce capital expenditure requirements (asset-light model or better utilization), collect receivables faster (reduce AR days outstanding), extend payables without penalty (negotiate terms with vendors), and reduce working capital requirements through inventory management and process improvement.
It varies by industry. Service businesses (pest control, fire protection, professional services) can achieve FCF margins of 10–20%. SaaS companies 15–25%. Manufacturing and construction often see 5–10%. The key benchmark is your industry — and whether your margin is above or below the average for comparable businesses.
Directly. Businesses with strong, predictable FCF command higher EBITDA multiples because buyers can underwrite the acquisition with more confidence. A business with lumpy or highly capital-intensive cash flow requires more buyer diligence and typically trades at a discount to peers. Improving FCF before a sale is one of the most impactful preparation steps an owner can take.