Formula and walk
FCF margin = FCF / Revenue.
Example: FCF $108,807 / Revenue $400,000 = 27.2%.
Rule of 40
Rule of 40 sums revenue growth (year over year) and FCF margin; a healthy software business clears 40. Some practitioners replace FCF margin with operating margin or EBITDA margin; FCF margin is the strictest of the three because it deducts CapEx and working-capital build.
Why FCF margin can exceed net-income margin
D&A is non-cash and is added back in OCF. If D&A persistently exceeds replacement CapEx (an asset-light firm running on owned IP), FCF margin sits above net-income margin. The inverse is true for capital-intensive industrials.
SBC complication
Stock-based compensation is added back to OCF; this inflates FCF (and FCF margin) for SBC-heavy firms unless you reverse the add-back. See SBC in FCF.