The formula
Standard FCF = Net cash provided by operating activities - Capital expenditures.
Walking a 10-K (Apple FY24 illustrative numbers)
Use this as a template; substitute your filer's numbers from the cash flow statement.
Source: Apple Inc. FY24 10-K cash flow statement[AAPL 10-K]. Apple uses the label "Payments for acquisition of property, plant and equipment" for CapEx; many filers use "Purchases of property and equipment."
What counts as CapEx?
For Standard FCF, CapEx is the single line in the investing section labelled "Purchases of property and equipment" (or equivalent). Some analysts also include capitalised software and capitalised internal-use development costs; if you do, document the choice. Acquisitions of businesses are not CapEx, regardless of how cash-intensive the deal was.
Why ignore lease principal under ASC 842?
Standard FCF ignores both operating- and finance-lease principal payments. Under ASC 842[ASC 842], operating-lease principal sits inside OCF (already deducted) and finance-lease principal sits in financing (not deducted). For retailers and airlines, the distortion is material and the Sector-aware FCFF treatmentis more honest.
When Standard FCF is the wrong method
- Banks: cash flow categories do not map. See why FCF is meaningless for banks.
- REITs: use FFO / AFFO. See REIT AFFO.
- Pre-revenue biotech: use cash runway. See biotech cash burn.