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Free cash flow

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  • 1. Management Control System Free Cash Flow
  • 2. Group MembersNeelam ChhipaSwati KamtheManju NaickerPrincy PhilipAshish Nimbalkar
  • 3. Introduction Measure of financial performance. A company is able to generate after laying out. Free cash flow is important. Without cash, its tough to develop new products. FCF is calculated as: EBIT(1-Tax Rate) + Depreciation & Amortization - Change in Net Working Capital - Capital Expenditure.
  • 4.  Another way of calculating FCF. It is important to note that negative free cash flow. Company is making large investments. The strategy has the potential to pay off in the long run.
  • 5. Free Cash Flow For The Firm Measure of financial performance that expresses. Calculated as: FCFF = Operating cash flow- Expenses- Taxes- Change in NWC- Change in Investment.
  • 6. Free Cash Flow Per Share Measure of a companys financial flexibility A proxy for measuring changes in earnings per share. Calculated as:
  • 7. Free Cash Flow To Equity How much cash can be paid to the equity shareholders FCFE is often used Calculated as: FCFE = Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment
  • 8. Free Cash Flow Yield An overall return evaluation ratio of a stock. Expected to earn against its market price per share. Calculated as:
  • 9. Free Cash Flow To Sales Ratio that illustrates the percentage of free cash flow to the amount of sales Calculated as: Free Cash Flow To Sales = Free Cash Flow ------------------- * 100 co’s annual sales
  • 10. Unlevered Free Cash Flow Before interest payments are taken into account Calculated as: Unlevered Free Cash Flow = EBITDA - CAPEX - Working Capital – Taxes Between unlevered cash flow and leveraged cash flow Company is more likely to run into problems if revenue streams dry up.