SBC Adjusted Free Cash Flow
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.
SBC Adjusted Free Cash Flow in Python
get_sbc_adjusted_free_cash_flow is part of 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.