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Free Cash Flow to Equity (FCFE) Calculator

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

Result

$420,000.00

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.

Sources

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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