Free Cash Flow (FCF) - Meaning, Formula, Examples, Calculation
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In this video on Free
In this video on Free Cash Flow FCF, We are going to understand this topic in detail including its meaning, Formula, calculation and examples.
𝐖𝐡𝐚𝐭 𝐢𝐬 𝐅𝐫𝐞𝐞 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰?
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FCF is a measure of how much cash a firm generates after accounting for the required working capital and capital expense (CAPEX) of the company.
𝐅𝐫𝐞𝐞 𝐜𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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Free cash Flow = Operating Cash Flow (CFO) - Capital Expenditure
𝐓𝐲𝐩𝐞𝐬 𝐨𝐟 𝐅𝐂𝐅 (𝐅𝐫𝐞𝐞 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰)
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There are two types of Free Cash Flow
1. Free Cash Flow to the Firm : This simply means the ability of the business to generate cash netting of all its capital expenditures.
𝐅𝐨𝐫𝐦𝐮𝐥𝐚 𝐭𝐨 𝐜𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐞 𝐅𝐫𝐞𝐞 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 𝐭𝐨 𝐭𝐡𝐞 𝐅𝐢𝐫𝐦 (𝐅𝐂𝐅𝐅)
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FCFF = Cash Flow from Operating Activity - Capital Expenditures
2. Free Cash Flow to Equity (FCFE): FCFE is a cash flow available for equity shareholders of the company.
𝐅𝐨𝐫𝐦𝐮𝐥𝐚 𝐭𝐨 𝐜𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐞 𝐅𝐂𝐅𝐄
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FCFE = FCFF + Net Borrowing - Interest x (1 - tax)
To know more about Free Cash Flow (FCF), you can go to this link here: https://www.wallstreetmojo.com/free-c...
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𝐖𝐡𝐚𝐭 𝐢𝐬 𝐅𝐫𝐞𝐞 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰?
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FCF is a measure of how much cash a firm generates after accounting for the required working capital and capital expense (CAPEX) of the company.
𝐅𝐫𝐞𝐞 𝐜𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
-----------------------------------------
Free cash Flow = Operating Cash Flow (CFO) - Capital Expenditure
𝐓𝐲𝐩𝐞𝐬 𝐨𝐟 𝐅𝐂𝐅 (𝐅𝐫𝐞𝐞 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰)
-----------------------------------------------------
There are two types of Free Cash Flow
1. Free Cash Flow to the Firm : This simply means the ability of the business to generate cash netting of all its capital expenditures.
𝐅𝐨𝐫𝐦𝐮𝐥𝐚 𝐭𝐨 𝐜𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐞 𝐅𝐫𝐞𝐞 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 𝐭𝐨 𝐭𝐡𝐞 𝐅𝐢𝐫𝐦 (𝐅𝐂𝐅𝐅)
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FCFF = Cash Flow from Operating Activity - Capital Expenditures
2. Free Cash Flow to Equity (FCFE): FCFE is a cash flow available for equity shareholders of the company.
𝐅𝐨𝐫𝐦𝐮𝐥𝐚 𝐭𝐨 𝐜𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐞 𝐅𝐂𝐅𝐄
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FCFE = FCFF + Net Borrowing - Interest x (1 - tax)
To know more about Free Cash Flow (FCF), you can go to this link here: https://www.wallstreetmojo.com/free-c...
Connect with us!
Youtube ► @wallstreetmojo
LinkedIn ► LinkedIn: mycompany
Facebook ► Facebook: wallstreetmojo
Instagram ► Instagram: wallstreetmojoofficial
Twitter ► Twitter: wallstreetmojo
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در تاریخ 1397/07/19 منتشر شده
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