Fcff fcfe
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The document defines various free cash flow metrics: 1) FCFF (free cash flow to firm) is calculated from net income, depreciation, interest, taxes, capital expenditures, and working capital investments. 2) FCFE (free cash flow to equity) is calculated from FCFF adjusted for interest and net borrowing. 3) Examples are provided to calculate FCFF given inputs for net income, depreciation, interest, taxes, capital expenditures, and working capital changes. FCFE is then calculated from FCFF using an additional input for net borrowing. 4) FCFF is most appropriate when a firm lacks a stable dividend policy or the policy is unrelated to earnings, as it reflects
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![FCFF FCFE FCFF from NI = NI + Dep n + interest*(1-t) – FC inv - WC inv FCFF from EBIT = EBIT*(1-t) + Dep n – FC inv - WC inv FCFF from EBITDA = EBITDA * (1-t) + Dep n * t – FC inv - WC inv FCFF from CFO = CFO+ interest * (1-t) - FC inv FCFE from FCFF = FCFF – interest * (1-t) + Net Borrowing FCFE from NI = NI + Dep n – FC inv –WC inv + Net Borrowing FCFE from CFO = CFO – FC inv + Net Borrowing FCFE from target debt ratio = NI - (1 - DR)*(FC inv - Dep n )] - [(1-DR)*(WC inv )] Q. Compute FCFF given NI=30, dep n = 2, interest 10% of 500, tax rate 30% and CapEx + WC changes are 5. Ans. FCFF=30+2+50*0.7–5= 30.5 mn Q. Compute FCFE given NI = 30, depreciation = 2 , interest 10%of 500 , tax rate 30% and CapEx + WC changes are 5 ( in million Rs) , net borrowings = 3 Ans. FCFF = 30 + 2 + 50*.7 – 5 = 30.5m (Rs) FCFE = 30.5 – 50*.7 – 3 = 24 m (Rs) Free Cash Flow Valuation ,[object Object],[object Object],[object Object],[object Object],[object Object]](https://image.slidesharecdn.com/fcff-fcfe-110127084135-phpapp01/85/Fcff-fcfe-1-320.jpg)
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Aminullah assagaf aip45 ai pemasaran_30 mar & 6 apr 2021
Aminullah assagaf aip45 ai pemasaran_30 mar & 6 apr 2021
Aminullah assagaf aip45 ai pemasaran_30 mar & 6 apr 2021
Aminullah assagaf aip45 ai pemasaran_30 mar & 6 apr 2021
Aminullah assagaf aip45 ai pemasaran_30 mar & 6 apr 2021
All the required formulas for time value of money at a glance bba or mba
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Chapter 6
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