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 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. Related Terms:
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 |