Free Cash Flow To Equity - FCFE

What does it 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 Says... 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.

Terms Related Links

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

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.




add investopedia foot
www.investopedia.com