reading 43, eoc question 6 understand, question, reading

Siddimaula

FCFE = NI - (1-DR) x (FCInv - DEP) - (1-DR) x WCInv
where does this formula come from ?
i understand the formulas for getting FCFE from Net Income, CFO , EBIT and EBITDA.
but how is the above formula related , and how did we drop the net borrowing ?
btw, the reason i am asking is b/c it helps me memorize the formula
if i understand the rationale behind it, or where it is coming from

Zestt

Good question….you sorta have to just memorize it, but it looks like we are just subtracting out the equity portion (because we want to find FCFE) of FCinv and WCinv if that helps….

dontknow1987

i couldnt tell you. I also dont understand why thats the formula used to forecast FCFE, i just know i need to use it so would love some insight.