Free Cash Flow to Equity Calculator
Calculate FCFE using multiple methods with comprehensive equity valuation analysis
Calculate Free Cash Flow to Equity
Common Inputs
Method-specific Inputs
Optional: Equity Analysis
FCFE Calculation
FCFE = Net Income + D&A - Fixed CapEx - Working CapEx + Net Borrowing
FCFE Analysis
No cash generation for equity holders
Valuation Insights:
- • FCFE directly values equity without debt adjustments
- • Use FCFE for stable capital structure companies
- • Negative FCFE may indicate growth phase or financial stress
- • Compare FCFE yield with industry peers for relative valuation
Example: Company Alpha
Financial Data (Net Income Method)
Net Income: $56,000,000
D&A: $50,000,000
Fixed CapEx: $100,000,000
Working CapEx: $25,000,000
Beginning Debt: $110,000,000
Ending Debt: $134,000,000
FCFE Calculation
Net Borrowing: $134M - $110M = $24,000,000
FCFE: $56M + $50M - $100M - $25M + $24M = $5,000,000
Result: $5,000,000 available for equity holders
FCFE Calculation Methods
Net Income
Most common method using NI + D&A
EBIT/EBITDA
Starting from operating metrics
Cash Flow
Direct from operating cash flow
FCFF
Convert from firm cash flow
FCFE vs FCFF
FCFE (Equity)
- • Cash available to equity holders
- • Direct equity valuation
- • Includes debt financing effects
FCFF (Firm)
- • Cash available to all investors
- • Total firm valuation
- • Excludes financing decisions
Formula: FCFE = FCFF - After-tax Interest + Net Borrowing
Understanding Free Cash Flow to Equity
What is FCFE?
Free Cash Flow to Equity (FCFE) represents the cash flow available to equity shareholders after covering operating expenses, capital expenditures, working capital needs, and debt service obligations. It's the cash that can be distributed as dividends or used for share buybacks.
When to Use FCFE?
- •Companies with stable capital structure
- •Direct equity valuation needs
- •Dividend capacity assessment
- •Share buyback analysis
Key Components
Net Borrowing
Change in debt level (Ending - Beginning Debt)
Fixed Capital Investment
Capital expenditures for property, plant, equipment
Working Capital Investment
Changes in operating working capital
Note: Negative FCFE indicates the company requires additional equity financing or is in a high-growth phase with significant capital requirements.