# How To Calculate Free Cash Flow in Sage Contractor | Arithmix

Learn how to calculate free cash flow in Sage Contractor with our step-by-step guide. Improve your financial analysis skills and make informed business decisions. Start optimizing your cash flow today.

Calculating free cash flow is an important task for any business owner or financial manager. It helps you understand how much cash your company has available to invest in growth opportunities or pay off debt. In Sage Contractor, calculating free cash flow is a straightforward process that can be done quickly and easily.

Before we dive into the steps for calculating free cash flow in Sage Contractor, let's first define what free cash flow is and why it's important to calculate.

## What Is Free Cash Flow?

Free cash flow is the amount of cash a company generates after accounting for all of its expenses and investments in capital expenditures (such as equipment or property). It's the cash that's available to be used for other purposes, such as paying dividends to shareholders, buying back stock, or investing in growth opportunities.

Free cash flow is a critical metric for investors and analysts because it provides insight into a company's financial health and ability to generate cash. A company with strong free cash flow is generally considered to be in a better position to weather economic downturns and invest in future growth.

## When Is It Valuable To Calculate Free Cash Flow?

Calculating free cash flow is valuable in a variety of situations. For example, if you're considering investing in a company, you'll want to know how much free cash flow it generates to determine whether it's a good investment. Similarly, if you're a business owner, you'll want to calculate your company's free cash flow to understand how much cash you have available to reinvest in the business or pay off debt.

Free cash flow is also useful for evaluating a company's ability to pay dividends. If a company has strong free cash flow, it may be more likely to pay dividends to shareholders, which can be an attractive feature for investors.

Now that we've covered the basics of free cash flow, let's dive into the steps for calculating it in Sage Contractor.

## Steps for Calculating Free Cash Flow in Sage Contractor

The formula for calculating free cash flow is:

Free Cash Flow = Operating Cash Flow - Capital Expenditures

To calculate free cash flow in Sage Contractor, follow these steps:

1. Calculate your operating cash flow. This is the amount of cash your company generates from its operations, such as sales and collections from customers, minus any operating expenses. You can find this information on your company's cash flow statement.
2. Calculate your capital expenditures. This includes any investments your company has made in property, equipment, or other long-term assets. You can find this information on your company's balance sheet.
3. Subtract your capital expenditures from your operating cash flow. The result is your free cash flow.

It's important to note that free cash flow can vary from year to year, so it's a good idea to calculate it on a regular basis to track your company's financial health over time.

Calculating free cash flow in Sage Contractor is a simple process that can provide valuable insights into your company's financial health. By understanding how much cash your company has available to invest in growth opportunities or pay off debt, you can make more informed decisions about the future of your business.

## How Do You Calculate Free Cash Flow in Sage Contractor

Sage Contractor itself isn’t naturally geared towards letting you calculate complex metrics like Free Cash Flow. As an alternative, teams typically use products like Arithmix to import data from Sage Contractor and build out dashboards.

## What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Sage Contractor, combine it with data from other systems, and create calculations like Free Cash Flow.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.