FCFE calculation

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Ok I’m getting a little crazy right now….just went through the schweser videos and there’s a discrepancy between a couple of the slides and the proper calculation of FCFE starting with EBIT and EBITDA… I was under the impression the FCFE was cash available to the equity holders, after taxes after interest payments to bondholders.
So I’m fairly certain you need to subtract off interest(1-t) in the calculation of FCFE starting with EBIT or EBITDA but a review of the formulas in schweser provide conflicting definitions…..I think the formula SHOULD be:
FCFE = EBIT (1 - Tax rate) - Int (1 - Tax rate) + Dep - FCInv - WCInv + Net borrowing
FCFE = EBITDA (1 - Tax rate) + Dep (Tax rate) - Int (1 - Tax rate) - FCInv - WCInv + Net borrowing
Now, schweser has them as:
FCFE = EBIT (1 - Tax rate) + Dep - FCInv - WCInv + Net borrowing
FCFE = EBITDA (1 - Tax rate) + Dep (Tax rate) - FCInv - WCInv + Net borrowing
Anyone want to tell me I’m not crazy??
 
where did you see the Schweser formulas?
I think your right, because when you arrive for calculation using FCFF:
FCFE = FCFF - [Int * ( 1- tax rate)] + net borrowing.
And to get FCFF from EBIT, your already:
[EBIT * (1-tax rate)] + dep - FCInv - WCInv.
So, I think your right, but I don’t see any pages where Scwheser arrived at FCFE using EBIT or EBITDA
 
In the DVD videos actually….
It’s on DVD 10, section 5 (i know this because i reported it to Schweser!!)
On one slide they show the calculation by subtracting the interest(1-t) and then they kind of sum up all the formulas a few slides later and the formula is showing but without the interest(1-t)……very frustrating trying to find the right answer!!!!
 
We start with FCFF which is the capital to the bondholders and stockholders
FCFF = EBIT (1 - Tax rate) + Dep - FCInv - WCInv
Then to calculate FCFE
1. We subtract the interest expense net of taxes: [Int * ( 1- tax rate)]
2. AddBack net Borrowing: NB
FCFE = EBIT (1 - Tax rate) + Dep - FCInv - WCInv - [Int * ( 1- tax rate)] + NB
Which is the cash available to the stockholders.
So the formula seems to be correct.
 
“So the formula seems to be correct.”
You mean Pencil’s formula?
 
Yes CFAHouston - Pencil’s formula looks correct to me intuitively.
“FCFE = EBIT (1 - Tax rate) - Int (1 - Tax rate) + Dep - FCInv - WCInv + Net borrowing”
But these days my intuition is on a union strike, so correct me if I am wrong?
 
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