Understanding Free Cash Flow Calculation

Very Easy Equity Valuation Techniques Free Cash Flow Models

Free cash flow (FCF) is a crucial metric used in equity valuation techniques, particularly in Free Cash Flow Models. Understanding the components of free cash flow is essential for evaluating a company's ability to generate cash after accounting for capital expenditures. Which of the following best describes the correct formula for calculating Free Cash Flow to the Firm (FCFF)?

Net Income + Depreciation - Changes in Working Capital - Capital Expenditures

Operating Cash Flow - Capital Expenditures

Sales - Cost of Goods Sold - Operating Expenses

Hint

Submitted7.5K

Correct4.4K

% Correct59%