Free Cash Flow For The Firm - FCFF


DEFINITION of 'Free Cash Flow For The Firm - FCFF'

A measure of financial performance that expresses the net amount of cash that is generated for the firm, consisting of expenses, taxes and changes in net working capital and investments.

Calculated as:

Free Cash Flow For The Firm (FCFF)


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BREAKING DOWN 'Free Cash Flow For The Firm - FCFF'

This is a measurement of a company's profitability after all expenses and reinvestments. It's one of the many benchmarks used to compare and analyze financial health.

A positive value would indicate that the firm has cash left after expenses. A negative value, on the other hand, would indicate that the firm has not generated enough revenue to cover its costs and investment activities. In that instance, an investor should dig deeper to assess why this is happening - it could be a sign that the company may have some deeper problems.

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  1. How does Free Cash Flow to the Firm (FCFF) measure money, time, and risk?

    Free cash flow to the firm, or FCFF, measures money and time through the use of short- and long-term assets and earnings ... Read Full Answer >>
  2. How does analyzing a bank's financial statements differ from companies in other sectors?

    Just like a nonfinancial service company, a bank has to manage the trade-off between its profits and risks. However, two ... Read Full Answer >>
  3. How do I discount Free Cash Flow to the Firm (FCFF)?

    Discounted free cash flow for the firm (FCFF) should be equal to all of the cash inflows and outflows, adjusted to present ... Read Full Answer >>
  4. Do you discount working capital in net present value (NPV)?

    Net present value (NPV) calculations should include the discounted value of changes in working capital. This treatment of ... Read Full Answer >>
  5. How is working capital different from fixed capital?

    There are several key differences between working capital and fixed capital. Most importantly, these two forms of capital ... Read Full Answer >>
  6. How can working capital affect a company's finances?

    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>

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