smuggycfa

I think this is a little jumbled. I think the point is that, because FCFE is a cash flow measure, you want to add back depreciation, because it is a noncash expense, but you want to subtract off capex, because, in a loose sense, it is the cash version of depreciation. Note that CapEx - Dep is called incremental capex, because it can be thought of as the amount being spent on new assets rather than on replacement assets.

Edit: this was in response to the initial post.



Edited 1 time(s). Last edit at Saturday, May 29, 2010 at 10:00AM by photoguy.