Net income to free cash flow (or “net income to FCF”) is an important metric used in corporate finance to get an overview of a company’s financial health. The ratio reflects how well the company is converting the profits generated by its operations into free cash flow, which can be used to pay dividends, buy back shares, and fund expansion. This ratio is calculated by dividing the company’s net income after taxes by its total free cash flow for a given period. A higher ratio indicates that the company is generating more money from its operations than it is paying out to investors and creditors. Companies with a net income to FCF ratio of 1 or above are generally considered financially healthy.