Free Cash Flow to Equity Calculator: Optimize Your Financial Analysis
Free Cash Flow to Equity (FCFE) shows how much cash remains for shareholders after operations, reinvestment and debt moves—U.S. listed firms returned a median 4.6 % of revenue as FCFE in 2022 (S&P Global, 2023). Use our calculator to plug revenues, expenses, asset data and borrowing, then see instant FCFE output.
Free Cash Flow to Equity Calculator
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How to use the tool
Total Revenues ($): Type figures such as 1 450 000 or 5 250 000.
Total Expenses ($): Enter costs like 1 050 000 or 4 100 000.
Initial Cost of Asset ($): Use values such as 650 000 or 2 300 000.
Lifetime of Asset (years): Add periods like 7 or 15.
Change in PPE ($): Insert adjustments such as 60 000 or 280 000.
Current Depreciation ($): Provide amounts like 38 000 or 190 000.
Current Assets ($): Input figures such as 320 000 or 1 150 000.
Current Liabilities ($): List obligations like 190 000 or 810 000.
Amount Company Borrows ($): Enter 140 000 or 640 000.
Debt Repaid ($): Add repayments such as 55 000 or 290 000.
Click “Calculate FCFE” to view the breakdown and final cash available to equity holders.
Dep&Amort = Initial Cost of Asset / Lifetime of Asset
CapEx = Change in PPE + Current Depreciation
ΔWorking Capital = Current Assets − Current Liabilities
Net Borrowing = Amount Borrowed − Debt Repaid
Example calculation 1
Total Revenues: $2 500 000
Total Expenses: $1 900 000
Initial Cost of Asset: $600 000
Lifetime of Asset: 8 years
Change in PPE: $70 000
Current Depreciation: $45 000
Current Assets: $350 000
Current Liabilities: $220 000
Amount Borrowed: $150 000
Debt Repaid: $60 000
Step-by-step:
Net Income = 600 000
Dep&Amort = 75 000
CapEx = 115 000
ΔWorking Capital = 130 000
Net Borrowing = 90 000
FCFE = 520 000
Example calculation 2
Total Revenues: $7 800 000
Total Expenses: $6 250 000
Initial Cost of Asset: $2 400 000
Lifetime of Asset: 12 years
Change in PPE: $300 000
Current Depreciation: $220 000
Current Assets: $1 050 000
Current Liabilities: $890 000
Amount Borrowed: $600 000
Debt Repaid: $280 000
Results:
Net Income = 1 550 000
Dep&Amort = 200 000
CapEx = 520 000
ΔWorking Capital = 160 000
Net Borrowing = 320 000
FCFE = 1 390 000
Quick-Facts
Standard FCFE formula appears in CFA Program Level II texts (CFA Institute, 2022).
S&P 500 firms spent 6.5 % of revenue on CapEx in 2022 (S&P Global, 2023).
Typical U.S. asset depreciation ranges 5–15 years (IRS Pub 946, 2023).
Debt covenants often limit leverage to 3× EBITDA (Moody’s Corporate Finance, 2023).
FAQ
What is Free Cash Flow to Equity?
FCFE measures cash a company can distribute to shareholders after operating costs, reinvestment and net borrowing adjustments (CFA Institute, 2022).
How does the calculator estimate depreciation?
It divides the asset’s initial cost by its useful life, mirroring straight-line schedules allowed by the IRS (IRS Pub 946, 2023).
Why adjust for change in working capital?
A rise in working capital ties up cash that could otherwise reach shareholders (Damodaran, 2023).
When is FCFE preferable to Free Cash Flow to Firm?
Use FCFE when valuing equity directly, especially in highly leveraged companies (CFA Program Curriculum, 2022).
Which sectors show volatile FCFE?
Utilities display stable FCFE, while technology firms swing widely with R&D and capex cycles (PwC Global Insights, 2023).
How can investors apply FCFE to valuation?
Discount projected FCFE at the cost of equity to estimate intrinsic share value (McKinsey Valuation, 2020).
Does positive FCFE guarantee dividends?
No. Management may reinvest or repurchase shares instead, prioritising strategic goals (Harvard Business Review, 2021).
What limits net borrowing in the formula?
Credit agreements restrict new debt, and rating agencies penalise excess leverage (Moody’s Corporate Finance, 2023).
Important Disclaimer
The calculations, results, and content provided by our tools are not guaranteed to be accurate, complete, or reliable. Users are responsible for verifying and interpreting the results. Our content and tools may contain errors, biases, or inconsistencies. We reserve the right to save inputs and outputs from our tools for the purposes of error debugging, bias identification, and performance improvement. External companies providing AI models used in our tools may also save and process data in accordance with their own policies. By using our tools, you consent to this data collection and processing. We reserve the right to limit the usage of our tools based on current usability factors. By using our tools, you acknowledge that you have read, understood, and agreed to this disclaimer. You accept the inherent risks and limitations associated with the use of our tools and services.
