Free Cash Flow to Equity

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Free Cash Flow to Equity

The cash that a company has on hand after all debt service and expenses have been paid and reinvestment has been made. The free cash flow to equity is calculated thusly:

FCFE = Net income + newly borrowed debt - capital expenditures - change in net working capital - debt service.

FCFE is a measure of a company's value and is considered an alternative to the dividend discount model.
References in periodicals archive ?
Total FCFE in 2012-20E could reach RUB485bn, while a 25% dividend payout ratio would require only RUB417bn for both the ordinary and the preferred shares.
Cuauhtemoc Perez, Urbi's CEO, added: "In line with the strategic framework for 2011-2015, we will continue focusing on a profitable growth with FCFE generation by taking advantage of Urbi's competitive advantages for the development of economic, vertical and sustainable housing that guarantees ongoing access to the program of subsidies; such as it is the case for our DUIS Valle San Pedro project, which -in addition to the main program of subsidies- gives us access to the extraordinary budget of subsidies for DUIS certified projects of MX$300 million.
FCFE is the free cash flows to equity holders divided by sales, Vega is calculated by Black-Scholes-Merton model, Ln (Size) is the logarithm of issue size, std (Beta) is standard deviation of beta.
As a result of its strong liquidity position, Urbi decided to use part of its cash flow to integrate 3 additional housing projects in progress during the quarter; without these investments Urbi's FCFE for 4Q10 would be of MX$1,435 million.