Embarrassing Question 3 FCFE

thommo77

What is this?

tango_gs

Free Cash Flow to Equity…

dmrktrading

FCFE  CFO  FCInvestment+Capex
Where CFO  Net Income + Noncash charges (Dep.)
IF CFO isn’t given  then WC needs to be subracted also

LorrinCFA

Free cash flow is cash available for positive NPV opportunities right?

JonnyKay

there were 12 FCFE questions in june 2008

AnalystForum

do you guys have any trick to remembering those two? I can’t seem to retain that for the life of me (despite knowing it will certainly be a question.

LiquidAssets10

BJ,
The easiest way I’ve seen it was in secret sauce:
FCFE = CFO  FCINV + net borrowing
FCFF = CFO  FCINV + int(1t)
Of course, CFO = NI + noncash charges + depreciation
I remember that the interest expense is added back to FCFF because the debt holders are involved.
By the way, can anyone give an intuitive definiiton for what these two actually mean? Yes, I know is cash available to the firm or to equity holders, but what’s perhaps an easier simpler way to interpret it?