Calculate the stock-based compensation (SBC) adjusted free cash flow, which deducts non-cash SBC expenses from free cash flow to give a more conservative view of the cash actually available to shareholders.

Free cash flow already excludes SBC as a cash expense (it is added back in the cash flow from operations), which can overstate the cash available to shareholders. Subtracting SBC treats it as if it were a real cash cost, which is a common quality-of-earnings adjustment, especially for companies that rely heavily on equity compensation.

The formula is as follows:

\[\text{SBC-Adjusted Free Cash Flow} = \text{Free Cash Flow} - \text{Stock Based Compensation}\]

Also known as: SBC-adjusted FCF.

No programming experience? With the Finance Toolkit MCP server, AI assistants such as Claude and ChatGPT can calculate the SBC Adjusted Free Cash Flow for you. Just ask in plain English.

Calculate the SBC Adjusted Free Cash Flow in Python

The SBC Adjusted Free Cash Flow is available in the Ratios module of the open-source Finance Toolkit. Install it with:

pip install financetoolkit -U

Then call get_sbc_adjusted_free_cash_flow as shown below.

from financetoolkit import Toolkit

toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")

sbc_adjusted_fcf = toolkit.ratios.get_sbc_adjusted_free_cash_flow()

Which returns:

  2021 2022 2023 2024 2025
AAPL 8.5047e+10 1.02405e+11 8.8751e+10 9.7119e+10 8.5904e+10
TSLA 1.362e+09 5.992e+09 2.545e+09 1.582e+09 3.395e+09

Parameters

get_sbc_adjusted_free_cash_flow accepts the following parameters:

  • rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
  • growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
  • lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
  • standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
  • trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.
EV to EBITDA Ratio EV to Operating Cashflow Ratio Earnings Yield Dividend Payout Ratio Reinvestment Rate Tangible Asset Value Net Current Asset Value EV to EBIT EV to Free Cash Flow Ratio Buyback Yield Shareholder Yield Price to Sales Ratio (PS)

The Ratios module page introduces the module, and the sidebar lists all of its functions.

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