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FCFF

Last modified by
on
Jul 24, 2020, 6:28:07 PM
Created by
on
Jul 17, 2014, 4:22:20 PM
`"Free Cash Flow to Firm" = EBIT * (1-t) + "Deprec. & Amort" - "Capital Expenditure" - DeltaWC `
`"Deprec. & Amort"`
`EBIT`
`"Capital Expenditure"`
`DeltaWC`
`"Tax rate"`
Tags
Finance: Corporate/Business
UUID
86cebad3-0dce-11e4-b7aa-bc764e2038f2

The free cash flow to firm (FCFF) equation is used to calculate the amount available to debt and equity holders.

Where:

  • EBIT=Earnings before interest and taxes
  • Capex= Capital expenditures
  • `Delta`WC= Change in working capital
  •  t= Tax rate

FCFF is a measurement of a company's profitability after all expenses and reinvestments. It is one of the many benchmarks used to compare and analyze financial health.
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