Free Cash Flow to Equity (FCFE) Calculator

Understand whether your business is actually generating surplus cash for equity investors, not just accounting profit. Plug in net income, non-cash charges, CapEx, working capital changes, and net borrowing to see if your equity story is backed by real, repeatable cash flows.

By CalcMastery Editorial Team

Free Cash Flow to Equity (FCFE) Calculator

Compute Free Cash Flow to Equity (FCFE) from net income, non-cash charges, capital expenditures, working capital movements, and net borrowing. Optionally view FCFE per share and how strongly earnings convert into cash available for equity holders.

$

Net income after taxes for the period, attributable to equity holders. Can be negative if the company reported a loss.

$

Non-cash depreciation and amortization expenses added back to convert earnings to cash flow.

$

Cash spent on property, plant, equipment, or other long-term assets during the period. Higher CapEx reduces FCFE.

$

Increase in net working capital (e.g., more inventory or receivables) uses cash and lowers FCFE; a decrease releases cash. Enter increases as positive and decreases as negative.

$

Debt issued minus debt repaid during the period. Positive values mean the company raised net new debt (increasing FCFE); negative values mean net repayments (reducing FCFE).

Turn on to compute FCFE per share using shares outstanding. Useful for comparing to dividends per share or intrinsic value estimates.

shares

Total number of diluted shares outstanding. Used only when FCFE per share is enabled.

Scenarios
Explore FCFE profiles for mature, high-growth, and deleveraging companies.
Stable Mature BusinessHigh-Growth, LeveragedDeleveraging CompanyHeavy Investment (Negative FCFE)

Results

  • Free Cash Flow to Equity (FCFE)$
  • FCFE as % of Net Income— %
  • Cash Conversion Profile—
  • FCFE per Share$
  • Net Income$
  • Depreciation & Amortization (D&A)$
  • Capital Expenditures (CapEx)$
  • Change in Net Working Capital$
  • Net Borrowing$

Enter your inputs above to calculate the results.

What is Free Cash Flow to Equity (FCFE)?

Free Cash Flow to Equity (FCFE) measures the cash that remains for common shareholders after operating expenses, taxes, capital expenditures, changes in net working capital, and net debt inflows or outflows.

It shows how much capital can realistically be distributed as dividends, share buybacks, or reinvested in equity-funded growth without stressing the balance sheet.

FCFE is central in equity valuation (discounted cash flow models), capital structure decisions, and assessing whether reported earnings translate into value-creating cash generation for owners.

Formula

FCFE = Net Income + Depreciation & Amortization − Capital Expenditures − Delta Net Working Capital + Net Borrowing

Where:

  • Net Income = profit after interest and taxes
  • Depreciation & Amortization = non-cash charges added back
  • Capital Expenditures (CapEx) = cash outflows for long-term assets
  • Net Working Capital = increase (use of cash) or decrease (source of cash) in operating working capital
  • Net Borrowing = new debt issued minus debt repaid

Example

Assume a company reports:

  • Net Income: $1,200,000
  • Depreciation & Amortization: $200,000
  • Capital Expenditures: $150,000
  • Increase in Net Working Capital: $20,000
  • Net Borrowing: $0

Then:

FCFE = 1,200,000 + 200,000 − 150,000 − 20,000 + 0 = 1,230,000

If the company has 5,000,000 shares outstanding, FCFE per share is:

FCFE per Share = 1,230,000 / 5,000,000 = 0.246 approx $0.25

This tells you the business is converting accounting profit into strong equity cash generation, supporting sustainable dividends, buybacks, or reinvestment in higher-return projects.

How to Use the Free Cash Flow to Equity (FCFE) Calculator

Enter your earnings, non-cash charges, reinvestment needs, and net borrowing, and the calculator will instantly show FCFE in dollars, as a percentage of net income, and on a per-share basis.

Enter Net Income

  • Input the company’s net income for the period in the “Net Income” field, matching the reporting currency and time frame (e.g., last fiscal year).

Add Depreciation & Amortization

  • Fill in “Depreciation & Amortization (D&A)” using the non-cash D&A expense from the income statement or cash flow statement so it can be added back to earnings.

Input CapEx and Change in Working Capital

  • Enter total “Capital Expenditures (CapEx)” for the period and the “Change in Net Working Capital” (positive for an increase, negative for a decrease). These capture the cash reinvested back into the business.

Adjust for Net Borrowing

  • In “Net Borrowing,” add the net change in interest-bearing debt (new debt issued minus principal repayments). Positive values increase FCFE; negative values reduce it;

Review FCFE level, ratios, and per-share output

  • Check the results panel for FCFE in dollars, FCFE as a % of Net Income, the “Cash Conversion Profile” label, and—if you’ve entered “Shares Outstanding” and enabled “Show FCFE per share”—the FCFE per share figure to compare against EPS, dividends, or valuation multiples.

Frequently Asked Questions

How do I calculate Free Cash Flow to Equity (FCFE) from net income with this calculator?

Use the standard formula: start with Net Income, add Depreciation & Amortization, subtract Capital Expenditures and the Change in Net Working Capital, then add Net Borrowing. The calculator applies this as: FCFE = Net Income + D&A − CapEx − ΔNWC + Net Borrowing.

How should I treat the “Change in Net Working Capital” input—what sign should I use?

Enter an increase in net working capital as a positive number (it will reduce FCFE) and a decrease as a negative number (it will boost FCFE). In practice, more cash tied up in receivables and inventory lowers FCFE, while releasing working capital raises it.

When is FCFE more appropriate than FCFF or dividend-based models for valuation?

Use FCFE when you want to value equity directly and the firm’s capital structure is relatively stable—especially for companies that don’t pay predictable dividends but still generate cash that could theoretically be paid out to shareholders.

What does it mean if FCFE is much higher or lower than net income?

FCFE materially above net income usually reflects strong cash conversion and/or net borrowing; FCFE well below net income often points to heavy capex or working-capital investment. Persistent gaps should make you revisit sustainability of growth, leverage, and shareholder payouts.

Sources & Methodology