I'm trying to calculate the Free Cash Flow (FCF) for a some public companies. My understanding is that the FCF formula is:

FCF = [Operating Income] - [Taxes] + [D&A] - [Chg in NWC] - [CapEx]

I am using Seeking Alpha's financials to calculate the FCF for Kroger (Symbol:KR) FY ending 1/31/16. I noticed that on the Cash Flows tab, Seeking Alpha calculates the FCF for you, but since I'm learning, I tried it myself. However, I couldn't come up with the same result, as below (in millions USD)...

FCF = 3,622 - 1,045 + 2,089 - (-111) - 3,349
FCF = 1,428

Seeking Alpha's FCF calculation shows: Levered FCF = 1029.5 Unlevered FCF = 1,330.8

I even tried checking it with the "shortcut" formula:

FCF = [Operating CF] - [CapEx]
FCF = 4,917 - 3,349
FCF = 1,568.0


  1. How is Seeking Alpha calculating the value they are getting? I'm using their numbers...
  2. Am I calculating the FCF correctly? I want to be able to know what goes into FCF calculation to be able to more accurately understand how to project future FCFs.

Thank you!

  • You could ask SA how they're calculating it... – RonJohn Dec 10 '20 at 4:19

I can't reconcile SeekingAlpha's numbers (I've never considered them a reliable data source), but your formula for OCF is just an estimate using the largest "buckets" that apply. You should just use the actual reported Operating Cash Flow and not try to calculate it yourself. It is not a straightforward calculation (SA uses 12 different "buckets") and you can only get it by using the cash flow statement that will already have the total for you.

Second, your formula is fine as a projection since most analysts don't project smaller items like "change in other net operating asses", so using the largest buckets and assuming that other items "even out in the wash" is acceptable. It also means that you may not be able to reconcile back to the financial statements exactly because of this other noise.

  • Thanks! That makes a lot of sense. In your opinion, what is the best free source for financial statement data? I really like the convenient layout style of sites like SA, but I want to have more trust in the data. – Edward Masters Dec 10 '20 at 15:34
  • I don't know of a free one that's 100% reliable - if you want 100% accurate data you'll have to pay for it (and I still don't have a recommendation). – D Stanley Dec 10 '20 at 15:37
  • If it is a listed company, wouldn’t the most reliable source be their financial reports, annual reports and interim reports? ..also aren’t these publicly available? – ssn Dec 10 '20 at 18:58
  • @ssn yes that would be the most reliable - one problem is that if you want to compare multiple companies their financials aren't always organized the same, so you have to "normallize" them. That's what these web sites do ,but they do it for thousands of companies and aren't 100% accurate. – D Stanley Dec 10 '20 at 20:58

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