FCFF understood, available, occurred, question, because

therecruit

I thought I understood why you add net borrowing back when calculating FCFE (because its cash available to equity)

So, why is it not added in when you calculate FCFF? I mean, it is a cash flow available to the firm right?

I already memorized the formulas months ago but this question just occurred to me.

flyinggirl

good question

ap0258

FCFF is close to CFO, and a debt issuance is would fall under CFF - cash flow from financing.

Those scientists better check their hypotenuses, dude!

wizofoz

The way I remember it is that you don't get to add cash when you sell/issue new equity under FCFE (or FCFF). It is cash that available but you are not allowed to.

For FCFF, we include bond holders so we cannot count funds related to them, in this case issuing new debt.

I cannot think of a logical reason its not included other than you would have to add equity issuance also then.