Free Cash Flow To Equity - FCFE
This is a measure of how much cash can be paid to the equity shareholders of the company after all expenses, reinvestment and debt repayment.
Calculated as: FCFE = Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment
Investopedia Commentary
FCFE is often used by analysts in an attempt to determine the value of a company.
This alternative method of valuation gained popularity as the dividend discount model's usefulness became increasingly questionable.
Related Links
Taking Stock Of Discounted Cash Flow
Free Cash Flow: Free, But Not Always Easy
Advanced Financial Statement Analysis
See also: Amortization, Capital Expenditure, Depreciation, Dividend Discount Model, Free Cash Flow, Free Cash Flow for the Firm, Reinvestment, Valuation
Also spelled: FCFE