FCFF is discounted at the WACC to value the whole firm (enterprise value). Subtract net debt to get equity value.
How to use the FCFF Calculator — Free Cash Flow to Firm
- Calculate from
- EBIT
- Net income
- Operating cash flow
- Interest expense
- Tax rate
- Depreciation and amortization
- Increase in working capital
- Capital expenditure
Results update as you type, and every field accepts the units shown in its menu.
How it works
Choose the method and enter the figures.
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 |
|---|---|
| Calculate from | Choose one: EBIT, Net income, Operating cash flow |
| EBIT | Amount in your currency |
| Net income | Amount in your currency |
| Operating cash flow | Amount in your currency |
| Interest expense | Amount in your currency |
| Tax rate | In % |
| Depreciation and amortization | Amount in your currency |
| Increase in working capital | Amount in your currency |
| Capital expenditure | Amount in your currency |
Example values
How the main result changes when EBIT changes and everything else stays at the example values above:
| EBIT | Free cash flow to firm |
|---|---|
| 275,000 | 117,250 |
| 412,500 | 225,875 |
| 550,000 | 334,500 |
| 687,500 | 443,125 |
| 825,000 | 551,750 |
| 1,100,000 | 769,000 |
Formula
FCFF = EBIT × (1 − t) + D&A − capex − ΔWCFCFF = net income + D&A + interest × (1 − t) − capex − ΔWCFCFF = CFO + interest × (1 − t) − capexWorked example
Inputs — Calculate from: EBIT; EBIT: $550,000; Net income: $400,000; Operating cash flow: $560,000; Interest expense: $40,000; Tax rate: 21 %; Depreciation and amortization: $150,000; Increase in working capital: $30,000; Capital expenditure: $220,000.
Results — Free cash flow to firm = $334,500.00.
Frequently asked questions
What is FCFF?
Cash flow available to both debt and equity holders.
What discount rate is used with FCFF?
The weighted average cost of capital (WACC).
Is FCFF the same as unlevered free cash flow?
Yes, essentially.
What formula does the FCFF Calculator — Free Cash Flow to Firm use?
FCFF = EBIT × (1 − t) + D&A − capex − ΔWC.