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Free cash flow (FCF) measures a company's financial performance. It shows the cash that a company can produce after deducting the purchase of assets such as property, equipment, and other major investments from its operating cash flow. This video provides a breakdown of the formula for FCF, including EBIT adjustments, tax rate considerations, depreciation and amortization add-backs, and working capital changes. Additionally, discover the difference between FCF and free cash flows to equity (FCFE) and how each is used to assess a company's financial performance and value. This video is perfect for finance professionals, students, and investors who want to deepen their understanding of cash flow forecasting. Topics covered: - What is free cash flow to the firm (FCFF)? - How FCFF differs from free cash flows to equity. - Practical applications of FCFF and FCFE in equity valuation. - The role of capital expenditures and working capital changes. - FCFF formula explained: EBIT, tax rate, depreciation, and more. You can learn more about this topic here: https://corporatefinanceinstitute.com/resources/knowledge/valuation/what-is-free-cash-flow-fcf/ And find further information on Free Cash Flow here: https://corporatefinanceinstitute.com/resources/knowledge/valuation/fcf-formula-free-cash-flow/ Now that you understand forecasting free cash flows to the firm and free cash flows to equity, the next step is applying these concepts in a full valuation model. Watch our video on https://youtu.be/L0e4tiZ-LA0 to see how these cash flows are used to calculate a company's intrinsic value step-by-step. #Forecasting #FreeCashFlow #CashFlow #Equity #Valuation
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