Free Cash Flow To Equity - FCFE

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What is '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

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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  3. What does free cash flow to equity (FCFE) really tell an analyst?

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  4. What are analysts looking for when they use free cash flow to equity (FCFE)?

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