Free Cash Flow to Equity Calculator

Depreciation reduced accounting income but is not itself a current-period cash outflow. FCFE therefore subtracts capital expenditure and adds depreciation back, commonly shown as subtracting net capital expenditure. This does not mean depreciation is free cash: assets may require replacement, and capex classifications and maintenance needs should be reviewed over a consistent period.

Enter an increase in non-cash operating working capital as positive because it uses cash and is subtracted. Enter a release as negative, which increases FCFE. Exclude cash, marketable securities, and interest-bearing debt under the standard operating definition. Reconcile receivables, inventory, and non-debt operating liabilities to avoid mixing financing flows into this line.

No. FCFE estimates cash potentially available after entered reinvestment and debt flows. Actual dividends and repurchases depend on management policy, legal restrictions, liquidity reserves, covenants, financing plans, acquisitions, and future operating needs. For valuation, forecast internally consistent future FCFE and discount it at a matching cost of equity rather than capitalizing one period mechanically.