how is free cash flow calculated 
there are two main approaches to calculating fcf the first approach uses cash flow from operating activities as the starting point and then makes adjustments for interest expense the tax shield on interest expense and any capital expenditures capex undertaken that year the second approach uses earnings before interest and taxes ebit as the starting point then adjusts for income taxes non cash expenses such as depreciation and amortization changes in working capital and capex in both cases the resulting numbers should be identical but one approach may be preferred over the other depending on what financial information is available 