Free Cash Flow To Equity - FCFE
- Free Cash Flow To Equity - FCFE
- This is a measure of how much cash can be paid to the equity shareholders of the company after all expenses, reinvestment and debt repayment.
Calculated as: FCFE = Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment
FCFE is often used by analysts in an attempt to determine the value of a company.
This alternative method of valuation gained popularity as the dividend discount model's usefulness became increasingly questionable.
Investment dictionary.
Academic.
2012.
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