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 or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_sbc_adjusted_free_cash_flow as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["CRM", "ADBE", "NOW"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_sbc_adjusted_free_cash_flow()
Or, after setting up the Finance Toolkit MCP, ask:
How much free cash flow did Salesforce, Adobe and ServiceNow generate after deducting stock-based compensation from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| ADBE | 5.824e+09 | 5.956e+09 | 5.224e+09 | 6.04e+09 | 7.91e+09 |
| CRM | 2.504e+09 | 3.034e+09 | 6.711e+09 | 9.251e+09 | 1.0893e+10 |
| NOW | 6.61e+08 | 7.72e+08 | 1.1e+09 | 1.669e+09 | 2.621e+09 |
Parameters
get_sbc_adjusted_free_cash_flow accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows (per quarter and not annualized with quarterly data). | 4 |