Another FCF question
I’ve seen FCF calculated in the following ways in commercial underwriting:
FCF=EBITDA - cash taxes - cashu interest - change in WC - CAPEX
FCF=CFO - CAPEX - dividends
how would you determine which to use?
The first is mostly used.
Any logic behind why the second one is used?
Isn't the first one a shorthand whereas the second is the technically correct version? For example, if you look at public companies that report FCF, all the ones i've seen do CFO - capex (which is why you have to adjust out SBC)
Neither. My understanding is FCF is net change in cash between periods, should be towards the very bottom of the CF statement. Is a levered number. Have seen both of the formulas in your post as shorthand though
Quia laudantium voluptatum odio ad dolore. Aut cum eveniet quia nemo praesentium et. Explicabo repellat quia dolor maiores earum dolores. Molestias sint nostrum omnis sint. Aut enim nobis sit ipsam libero.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...