Free Cash Flow To Equity - FCFE
Definition of 'Free Cash Flow To Equity - FCFE'
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.
Calculated as: FCFE = Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment
Investopedia explains 'Free Cash Flow To Equity - FCFE'
FCFE is often used by analysts in an attempt to determine the value of a company.
This alternative method of valuation gained popularity as the dividend discount model's usefulness became increasingly questionable.