Enter the total cash flows from operations, capital expenditures, and net debt issues into the calculator to determine the free cash flow to equity.
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The following formula is used to calculate the free cash flow to equity.
FCFE = CO – CE + D
- Where FCFE is the free cash flow to equities
- CO is the cash from operations
- CE is the capital expenditures
- D is the net debt issued
Free cash flow to equities is the total sum of the cash from operations and net debt issued minus the capital expenditure.
How to calculate FCFE?
- First, determine the cash flow from operation.
Calculate the net cash flow generated by operations in the company.
- Next, determine the total CE.
Calculate the total amount of capital expenditure spent on the company.
- Next, determine the net debt issued.
Calculate the total amount of net debt that has been issued/repaid.
- Finally, calculate the FCFE.
Calculate the FCFE by subtracting the capital expenditures from the cash and then adding the net debt.
FCFE stands for free cash flow to equity. This term is a financial measure of the amount of cash a business can generate that is available to distribute to shareholders. This cash is what is available, but usually, not all of it actually gets distributed to the shareholders.