Free Cash Flow To Equity - FCFE

What Does Free Cash Flow To Equity - FCFE Mean?
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.

Related Terms

Amortization
Capital Expenditure
Depreciation
Discounted Cash Flow - DCF
Dividend Discount Model - DDM
Free Cash Flow - FCF
Free Cash Flow for the Firm - FCFF
Free Cash Flow Yield
Reinvestment
Valuation
More Related Terms

Related Links

Financial Statements: Cash Flow - Accounting rules require companies to classify their natural cash flows into one of three buckets. Together these buckets constitute the statement of cash flows.
Free Cash Flow: Free, But Not Always Easy - Free cash flow is a great gauge of corporate health, but it's not immune to accounting trickery.
Taking Stock Of Discounted Cash Flow - Learn how and why investors are using cash flow-based analysis to make judgments about company performance.
Discounted Cash Flow Analysis - Find out how analysts determine the fair value of a company with this step-by-step tutorial and learn how to evaluate an investment's attractiveness for yourself.
Advanced Financial Statement Analysis - Learn what it means to do your homework on a company's performance and reporting practices before investing.

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