Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
McKesson's free cash flow turned positive this quarter, supported by a significant improvement in operating cash flow. Revenue increased compared to both the prior quarter and the same quarter last year.
- Revenue rose from the prior quarter and from a year earlier. Operating cash flow shifted from negative to positive, resulting in positive free cash flow and a positive free cash flow margin. Capital expenditure decreased slightly versus both comparison periods.
- Compared to the prior quarter, operating cash flow and free cash flow improved from negative to positive, with higher revenue. Versus the same quarter last year, revenue was higher but operating cash flow and free cash flow were lower, leading to a slightly weakened free cash flow margin.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$4.4B
Trailing twelve-month free cash flow.
Quarter free cash flow
$890.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$965.0M
Cash generated by operations before capital spending.
CapEx
$75.0M
Capital spending and related asset purchases.
FCF margin
1.2%
The share of revenue converted into free cash flow.
Cash flow trend
A short quarterly history shows whether FCF is scaling with revenue or only spiking for one period.
| Period | Revenue | Operating CF | CapEx | FCF | FCF margin |
|---|---|---|---|---|---|
| 2022-12-31 | $70.5B | $1.7B | $108.0M | $1.6B | 2.2% |
| 2023-03-31 | $68.9B | $3.3B | $293.0M | $3.0B | 4.4% |
| 2023-06-30 | $74.5B | -$1.1B | $78.0M | -$1.1B | -1.5% |
| 2023-09-30 | $77.2B | $965.0M | $75.0M | $890.0M | 1.2% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 134.0% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 0.1% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$3.1B | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Operating Cash Flow Recovery
Operating cash flow swung from a significant negative amount in the prior quarter to a positive amount this quarter, the most notable change among the metrics.
This turnaround was the primary factor behind free cash flow returning to positive territory.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue rose from the prior quarter and from a year earlier. Operating cash flow shifted from negative to positive, resulting in positive free cash flow and a positive free cash flow margin. Capital expenditure decreased slightly versus both comparison periods.
Compared to the prior quarter, operating cash flow and free cash flow improved from negative to positive, with higher revenue. Versus the same quarter last year, revenue was higher but operating cash flow and free cash flow were lower, leading to a slightly weakened free cash flow margin.
Monitor the consistency of operating cash flow after the prior quarter's negative result.