Medical-Device Free Cash Flow: Formula and Filing Example

What this resource does

A common analyst-defined free-cash-flow convention is operating cash flow after cash taxes minus gross cash purchases of property, plant, equipment and intangible assets. State the treatment of capital advances, leases and acquisitions: FCF is not a single universally defined statutory subtotal.

Worked historical example: Poly Medicure's consolidated FY2025-26 report shows operating cash flow of INR 24,637.46 lakh and fixed-asset cash purchases, including capital advances, of INR 30,839.19 lakh. Subtraction gives minus INR 6,201.73 lakh, or minus INR 62.02 crore rounded. This page calls it a CFO-minus-reported-fixed-asset-purchases proxy, not issuer-reported FCF or a medical-device industry benchmark.

The cash-flow statement aggregates fixed-asset purchases rather than separating cash PPE and intangible payments. We retain that boundary instead of inventing a split from asset-note additions. The example concerns the year ended 31 March 2026, not the company's current share price or latest quarter.

Methodology

1. Use the consolidated cash-flow statement on printed pages 197-199 of the official annual report. Keep the FY2026 column, INR-lakh units and reporting scope together; do not mix standalone cash flow with group capex.
2. Take cash flow after the statement's cash-tax deduction, then subtract the positive magnitude of the reported fixed-asset cash payment. Its parentheses indicate an outflow: subtracting an already-negative value would incorrectly turn expenditure into an addition.
3. Keep this calculation gross of asset-disposal receipts. Do not substitute total investing cash flow: securities investments, deposit movements and acquisitions answer different questions from cash purchases of operating assets.
4. Cross-check the asset notes without confusing accrual additions with cash payments. The report distinguishes PPE, intangibles, acquisition movements, currency translation and work-in-progress; these categories do not establish a separate cash PPE/intangible bridge.

How to interpret it

For a device manufacturer, distinguish cash tied up in inventories and customer receivables from cash spent on production capacity or capitalized intellectual property. The example's inventory and receivable cash movements are already in operating cash flow; subtracting them again would double-count working capital.

The issuer discusses medical-device registration/certification requirements and extended receivable-cycle risks. These are useful evidence questions for an analyst, not proof of the cause of this year's cash changes. Check product/customer explanations before attributing a cash shortfall to approval delays or collection problems.

A negative proxy means the selected operating cash inflow did not cover the selected fixed-asset cash purchases during that reporting period. It does not by itself establish insolvency, poor investment quality or a buy/sell conclusion; timing, funding and project economics require separate evidence.

Limitations and failure modes

• The cash statement's aggregate asset-payment line includes capital advances. It does not isolate maintenance versus expansion expenditure or separately verify cash PPE and intangible purchases.
• Business-acquisition and pending-control payments, lease repayments, other financing flows and asset-disposal receipts are not deducted or netted in this chosen proxy. They still matter to total liquidity and must not be treated as absent.
• Asset-note additions, acquired intangibles and non-cash depreciation are not interchangeable with cash capex. Adding depreciation back to an already-reconciled operating cash subtotal would also require avoiding double counting.
• This is one issuer and one historical annual period. It is not a sector average, a universal target, current cash-flow guidance or a prediction of returns.

Research workflow

1. Record the issuer, year-end, consolidation basis, units, original PDF and exact cash-flow rows beside the calculation. Retain the source date separately from this guide's editorial check date.
2. Document whether a broader measure would deduct leases or acquisitions, and why. Do not present differently scoped figures as comparable FCF without a reconciliation.
3. For medical-device interpretation, connect manufacturing assets, capitalized product/IP expenditure and working capital to specific filing evidence. Flag unsupported component splits and causal explanations rather than replacing uncertainty with a benchmark.
4. For a multi-year comparison, repeat the same disclosed-line calculation for each period and reconcile changes in acquisitions, consolidation and cash-line labels before drawing a trend.

Questions and answers