FCFE is the basis of equity valuation models. A company that borrows to fund dividends can show high FCFE temporarily, so look at several years.
How to use the FCFE Calculator – Free Cash Flow to Equity
- Net income
- Depreciation and amortization
- Capital expenditure
- Increase in working capital
- Net borrowing (new debt − repayments)
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter net income, depreciation and amortization, capital expenditure, the change in working capital and net borrowing.
Tips
- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.
Common mistakes to avoid
- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.
Inputs explained
| Field | What to enter |
|---|---|
| Net income | Amount in your currency |
| Depreciation and amortization | Amount in your currency |
| Capital expenditure | Amount in your currency |
| Increase in working capital | Amount in your currency |
| Net borrowing (new debt − repayments) | Amount in your currency |
Example values
How the main result changes when Net income changes and everything else stays at the example values above:
| Net income | Free cash flow to equity |
|---|---|
| 200,000 | 150,000 |
| 300,000 | 250,000 |
| 400,000 | 350,000 |
| 500,000 | 450,000 |
| 600,000 | 550,000 |
| 800,000 | 750,000 |
Formula
FCFE = net income + D&A − capex − change in working capital + net borrowingor FCFE = operating cash flow − capex + net borrowingWorked example
Inputs — Net income: $400,000; Depreciation and amortization: $150,000; Capital expenditure: $220,000; Increase in working capital: $30,000; Net borrowing (new debt − repayments): $50,000.
Results — Free cash flow to equity = $350,000.00.
Frequently asked questions
What is FCFE?
Cash available to shareholders after reinvestment and debt flows.
How is FCFE different from FCFF?
FCFF is before debt payments; FCFE is after.
What is FCFE used for?
Valuing equity with a discounted cash flow model.
What formula does the FCFE Calculator – Free Cash Flow to Equity use?
FCFE = net income + D&A − capex − change in working capital + net borrowing.