after trying to get by without learning this i decided to devote some time to it. anyone got advice on learning this concept besides memorizing the formula?
the formula is easy man! FCFE= CFO-Fixed capital investment + net borrowing this is probably the one I know best!
Nothing that complicated. FCFE is what remains from your NI after allocation of capital expenditures and working capital (that you have to make to remain a going concern) and you pay your debtors (that have seniority over shareholders), but also considering whether you borrowed that year: FCFE=NI-CAPEX-Changes in working capital+Net borrowing-Net debt repayment.
And operating free cash flow does not take payments to debt holders out right?
you mean Free Cash Flow to the Firm FCFF? No, it doesn’t.
My note cards say operating free cash flow, they must be the same.
note that you also add any proceeds realised from sale of capex
amberpower Wrote: ------------------------------------------------------- > My note cards say operating free cash flow, they > must be the same. note the difference b/T EBITDA, FCFE, FCFF, and CFO. EBITDA is a proxy for cash flow (quick and dirty approach) but not the same, since EBITDA does not consider changes in working capital
what is contained in working capital investment? i’m trying to differentiate between FCinv and WCinv.
vbcfa Wrote: ------------------------------------------------------- > what is contained in working capital investment? > i’m trying to differentiate between FCinv and > WCinv. thinks like inventories, receivables, and payables. the difference b/t CA and CL = WC, and that’s the $ the firm needs to pay its bills.