![]() Debt that is repaid is subtracted from the formula.įree cash flow to the firm (FCFF): This formula is (net operating profit after tax + depreciation and amortization expenses – capital expenditures – net working capital. ![]() This metric focuses on a business’s operational profitability from its main operations before the impact on capital structure.Ĭash flow from operations: Otherwise referred to as operating cash flow, this measures the cash generated or used up by a company from its day-to-day operations.įree cash flow to equity (FCFE): FCFE is measured as (cash from operating activities – capital expenditures + net debt issued). To get EBITDA, you’ll need the net income plus tax expense, interest expense, depreciation expense, and amortization expense. Below are some of the common ways financial professionals measure the value and financial health of a particular business.Įarnings before interest, tax, depreciation, and amortization (EBITDA): EBITDA measures a company’s operating performance. When corporate finance experts discuss “cash flow,” they may be referring to a few different metrics. Consistently high free cash flow may indicate good earnings prospects for the future. ![]()
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