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Free Cash Flow to Equity (FCFE) Calculator

Enter operating cash flow, capital expenditures and net borrowing to get FCFE.

How it is calculated

The tool uses the shortcut form of the equity cash flow: FCFE = OCF − CapEx + net borrowing. OCF is operating cash flow from the cash-flow statement, CapEx is capital expenditure (enter it as a positive amount; a negative value gives no result), and net borrowing is new debt raised minus debt repaid in the same period. Net borrowing is optional and treated as 0 if left empty; a negative figure means the firm repaid more than it borrowed. All amounts must be in the same currency and period, and the result is shown with a dollar sign as a display symbol only. Because the formula starts from OCF, interest is already deducted, so it is not subtracted again.

Worked example

A company reports operating cash flow of 500,000 and capital expenditure of 120,000, and it borrowed 40,000 more than it repaid. FCFE = 500,000 − 120,000 + 40,000 = $420,000.00. That is the cash theoretically available to shareholders after reinvestment and debt flows. If the company had instead repaid 40,000 net, FCFE would be $340,000.00.

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Common mistakes

  • Entering net borrowing with the wrong sign. Repaying more debt than you raise is a negative number, and entering it as positive overstates FCFE.
  • Typing capital expenditure as a negative number (as it appears in the investing section of a cash-flow statement). The field wants a positive amount; a negative value gives no result.
  • Starting from net income instead of operating cash flow, or subtracting interest again after using OCF.
  • Mixing periods or currencies, for example annual OCF with quarterly CapEx.
  • Treating the figure as dividends actually paid. It is the cash that could be distributed, and a company may pay out less or more.

About this calculator

This calculator computes free cash flow to equity, FCFE = operating cash flow − capital expenditures + net borrowing, which represents the cash left over after a company reinvests in its own operations and settles its net debt flows — the cash that could theoretically be paid out to shareholders as dividends or buybacks.

Equity research analysts use FCFE as the cash flow input in a dividend-discount or equity DCF valuation, discounting projected FCFE at the cost of equity to estimate what a company's shares are worth, which makes it a more direct measure of shareholder value than free cash flow to the firm.

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