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Free Cash Flow to Firm (FCFF) is the cash a company generates that's available to ALL its capital providers — both equity holders and debt holders — before financing decisions. It's a core input for firm-level DCF valuation.
How it works
Enter net income, depreciation & amortization (a non-cash expense added back), interest expense, the tax rate (%), capital expenditures, and the change in working capital. The calculator applies FCFF = Net Income + D&A + Interest × (1 − Tax Rate) − Capex − ΔWorking Capital.
- Enter net income.
- Enter depreciation & amortization.
- Enter interest expense.
- Enter tax rate (%).
- Enter capital expenditures.
- Enter change in working capital.
- Click Calculate to see your results.
Examples
A profitable, moderately capital-intensive company
With $100,000 net income, $20,000 of D&A, $10,000 interest expense, a 25% tax rate, $30,000 of capex, and a $5,000 increase in working capital, FCFF works out to $92,500.
Who should use it
- Enterprise-value DCF valuation.
- Comparing operating cash generation across companies with different debt levels.
Industry applications
- Corporate finance and valuation
- Equity research and investment analysis
Advantages
- Captures cash available to the whole firm, useful for comparing companies with different capital structures.
- A standard input for enterprise-value-based DCF valuation.
Limitations
- Requires several inputs pulled from different parts of the financial statements, which takes more setup than a single-line metric.
Common mistakes to avoid
- Forgetting to apply the tax shield to interest expense before adding it back.
- Getting the sign of the working-capital change backwards — an increase in working capital REDUCES free cash flow, a decrease INCREASES it.
Best practices
- Double check the sign convention on your working-capital change input before submitting.
- Use consistent units (e.g. all figures in thousands, or all in raw dollars) across every input.
Tips
- If you're building a full DCF model, discount FCFF at WACC (not at cost of equity alone) since it represents cash for all capital providers.