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


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BREAKING DOWN '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.

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  1. Besides free cash flow to equity (FCFE), what are other metrics for estimating a ...

    There are several metrics available for estimating a company’s value. In addition to free cash flow to equity (FCFE), there ... Read Full Answer >>
  2. What's the difference between free cash flow to equity and accounting profits?

    The key difference between Free Cash Flow to Equity (FCFE) and Accounting Profit is that while the former calculates the ... Read Full Answer >>
  3. What does free cash flow to equity (FCFE) really tell an analyst?

    Investors are keen to find the right set of metrics to evaluate the performance and likely growth of a company. Free cash ... Read Full Answer >>
  4. What are analysts looking for when they use free cash flow to equity (FCFE)?

    Analysts use free cash flow to equity (FCFE) to determine whether a company has enough cash available to pay its shareholders ... Read Full Answer >>
  5. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  6. How can companies use the cash flow statement to mislead investors?

    Cash flow is a means for most investors to examine the actual economics of a business they might invest in, especially from ... Read Full Answer >>

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