Free cash flow to equity (FCFE) is the amount of cash a business generates that is available to be potentially distributed to shareholders. It is calculated as Cash from Operations less Capital Expenditures plus net debt issued. This guide will provide a detailed explanation of why it’s important and how to calculate it, along with several examples.

FCFE Formula


Let’s look at how to calculate Free Cash Flow to Equity (FCFE) by examining the formula. It can easily be derived from a company’s Statement of Cash Flows.

Formula:

FCFE = Cash from Operating Activities – Capital Expenditures + Net Debt Issued (Repaid)