---
title: "Definition of Net Debt/FCF"
url: https://signalscreener.fr/definition/net-debt-to-fcf/
markdown_url: https://signalscreener.fr/definition/net-debt-to-fcf.md
description: "Net Debt-to-FCF shows how many years it would take to pay off all net debt using free cash flow."
type: glossary-definition
site: Signal Screener
language: en
keywords:
  - "Net Debt/FCF"
  - "Net Debt-to-Free Cash Flow"
translations:
  es: https://signalscreener.fr/es/definition/net-debt-to-fcf.md
  fr: https://signalscreener.fr/fr/definition/net-debt-to-fcf.md
---

# Net Debt-to-Free Cash Flow

## What is Net Debt/FCF?

Net Debt-to-FCF shows how many years it would take to pay off all net debt using free cash flow. It's a key measure of financial health and leverage.

## Think of it like this

You owe $50,000 on your car (debt) but have $10,000 in savings (cash). Net debt is $40,000. If you save $10,000 per year, your Net Debt/FCF ratio is 4 - it takes 4 years to pay off the car.

## Formula

```
Net Debt/FCF = (Total Debt - Cash) / Annual Free Cash Flow
```

- **Net Debt**: Total Debt minus Cash & Equivalents
- **Free Cash Flow**: Annual FCF generated

## Why it matters

- Shows years needed to pay off debt
- Lower ratio = safer, more financial flexibility
- Important for assessing bankruptcy risk
- Credit agencies use this metric

## What's a good value?

| Range | Rating | What it means |
|---|---|---|
| < 1 | Excellent | Could pay off debt in under a year |
| 1-3 | Good | Comfortable debt levels |
| 3-5 | Moderate | Watch carefully, manageable but elevated |
| > 5 | Risky | High debt burden, financial stress |

## Real-world example

Apple: Often negative (more cash than debt) - fortress balance sheet. AT&T: 3-4 ratio - telecom with high debt load. Airlines post-COVID: 8+ - struggling with debt. Tech startups: ratio doesn't apply if burning cash.

---

This is educational content, not financial advice.

Source: [Definition of Net Debt/FCF](https://signalscreener.fr/definition/net-debt-to-fcf/) on Signal Screener. Free to quote and cite with attribution and a link to that URL, which is the canonical one.

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