Free Cash Flow to Firm Calculator
Calculate FCFF with multiple methods for DCF valuation and company analysis
Calculate Free Cash Flow to Firm
Company's after-tax profit
Company's effective tax rate
Non-cash depreciation and amortization expenses
Annual interest expense on debt
Capital expenditures (CapEx)
Increase in working capital
Free Cash Flow to Firm Results
Method: Net Income Method
Formula: FCFF = Net Income + D&A + Interest Expense × (1 - Tax Rate) - Fixed Capital Investment - Working Capital Investment
After-tax Interest: $0
FCFF Analysis
Company Alpha Example
Financial Data
Net Income: $56,000,000
EBIT: $95,000,000
EBITDA: $145,000,000
Operating Cash Flow: $81,000,000
D&A: $50,000,000
Interest Expense: $15,000,000
Tax Rate: 30%
CapEx: $100,000,000
FCFF Calculations (All Methods)
Net Income Method: $56M + $50M + $15M × (1-30%) - $100M - $25M = -$8.5M
EBIT Method: $95M × (1-30%) + $50M - $100M - $25M = -$8.5M
EBITDA Method: $145M × (1-30%) + $50M × 30% - $100M - $25M = -$8.5M
CFO Method: $81M + $15M × (1-30%) - $100M = -$8.5M
FCFF Calculation Methods
Net Income
Add back non-cash expenses and tax shield
Most comprehensive bottom-up approach
EBIT
Start from operating earnings
Focuses on operational performance
EBITDA
Include D&A tax effects
Useful for high-depreciation businesses
Cash Flow
Start from actual cash flow
Most direct approach
FCFF Applications
DCF valuation and enterprise value calculation
Company comparison and benchmarking
M&A analysis and target evaluation
Capital allocation decision support
Investment thesis validation
Understanding Free Cash Flow to Firm (FCFF)
What is FCFF?
Free Cash Flow to Firm (FCFF) represents the cash flow available to all capital providers (debt and equity holders) after accounting for operating expenses and capital investments. It's a key metric for company valuation and financial analysis.
Why Use FCFF?
- •Measures cash available to all capital providers
- •Essential for DCF valuation models
- •Helps evaluate capital allocation efficiency
- •Facilitates company comparison
FCFF vs. FCFE
FCFF: Cash flow to all capital providers
FCFE: Cash flow to equity holders only
Relationship: FCFE = FCFF - After-tax Interest + Net Borrowing
Key Components
- D&A: Non-cash depreciation and amortization
- CapEx: Capital expenditures for growth/maintenance
- Working Capital: Investment in current operations
- Tax Shield: Interest expense tax deduction
Note: FCFF is used in enterprise valuation as it represents cash flows before financing decisions.