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The cash flow available after operating expenses, interest payments on debt, taxes, net principal repayments, preferred stock dividends, reinvestment needs and changes in working capital
Free Cash Flow to Equity = Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment.
This is a measure of how much cash can be paid to the equity shareholders of the company after all expenses, reinvestment and debt repayment.
this is The amount of Remaining Cash left to Shareholders after the Company paid all Oprerating Expenses .
FCFE (Equity Value) = EBIT - Tax + Net borrowing - Net debt repayment - Interest payment
FCFE=NOPAT-capital expenditures-working capital-debt repayment+debt issue.its basically value of company to its equity holders after deduting the above mention expenses
Free Cash Flow to Equity is a ratio used by analyst to determine the value of the Company. Free Cash means the Cash that avialable after makeing all payment and expenditures (capital expenditures and operation expenses) such as repayment on debt, investing in an asset or divestment in an asset etc.
In corporate finance, free cash flow (FCF) is a way of looking at a business's cash flow to see what is available for distribution among all the securities holders of a corporate entity. This may be useful to parties such as equity holders, debt holders, preferred stock holders, convertible security holders, and so on when they want to see how much cash can be extracted from a company without causing issues to its operations.
ElementData SourceNet Profit Current Income Statement + Interest expense Current Income Statement - Net Capital Expenditure(CAPEX) Current Income Statement - Net changes in Working Capital Prior & Current Balance Sheets: Current Assets and Liability accounts - Tax shield on Interest Expense Current Income Statement = Free Cash Flow
the cash flow avaialabe to all the provider of equity finance, this also a good indicator of divident payment and aslo presents sound basis for business valuations.
