Free Cash Flow

[@alexg2339]

Off all the videos on KZbin your explanation was the clearest

[@chiaradebrabant-bibi8423]

I was watching the recording of my professor at Ghent university. She didnt explain it well, i was like no time to waiste, let me head to youtube. So thank you for making this content!

[@intellectualninjamonkey2496]

This is just perfect instruction. I do not know why they do not teach like that in university. This was so clear and straightforward.

[@JasonJafry]

Exactly! why don't they just make it this simple?

[@Kringle_X]

You're a life savior!

[@nakbarutube]

no words can express my heart-felt gratitude. simply awesome!!!!

[@Edspira]

Wow, thank you!

[@dhavalrohilla696]

I have tears in my eyes ,I was so confused about this concept about the formula of FCFF thank you so much😀😀

[@jerarrdpandohe4256]

Love your videos, from Managerial Accounting to Financial management 🔥🔥🔥

[@rob8482]

Fantastic, thank you so much for these videos! Always makes sense, you have a real talent.

[@anshumanster]

best explanation in youtube

[@lynnz0203]

Beautiful, can't image how to pass the course without you 😩

[@Edspira]

Happy to help! I'm glad you are doing well :)

[@zz7733]

This guy sounds exactly like Food Wishes

[@andypotanin]

Thank you, sir - you got yourself a new subscriber.

[@ngl.rsr.1213]

Thank you so much Edspira!💛

[@mariakarinagonzalesllontop2497]

great explanation. Ive seen other videos in which they include interest in the formula, but I realized it doesnt matter because it does not affect the results

[@Edspira]

Yes, there are multiple ways of calculating Free Cash Flow so this can be really confusing. Some companies simply calculate FCF as Operating Cash Flow minus Capital Expenditures in their 10-K filings, while in the field of investment banking it is customary to calculate FCF using a slightly different formula. And there is a distinction between levered FCF and unlevered FCF, which removes the effects of financing. I plan to make some more videos on this

[@mariakarinagonzalesllontop2497]

@@Edspira thanks for responding. That`d be great.

[@oae3186]

I swear this felt like rocket science in class😣 Thank you❤️

[@venjaminschuster2797]

Sameee!

[@bhagatsingh5019]

Thank you for your all beautifully explained videos.

[@salmahazem5850]

Thank you so much you're the best

[@Leandrasjones]

minute @ 3:40 could anyone explain the tax bit of (1-t) a little more? So if tax is 40% you want to multiple by 60% (1-40%) why? I wasn't too clear on the reason for this Also overall why is the free cash flow number before any consideration for debt a good number to know? What is the benefit of knowing this? if the debt is in the business and must be paid, isnt the free cash flow really after paying the debt? Please help me understand generally the benefit of free cash flow. Thanks.

[@davidsw92]

I always feel like I'm watching an accounting version of FoodWishes when I watch this channel

[@bob6168able]

Excellent

[@leonyin83]

you are god-send

[@mohamedfaye2017]

Great video. Thanks for the value!!

[@shimonize11]

What would the INCREASE In networking capital be? would it be the difference between this year and the previous year?

[@amazingabs]

I have the same question...my guess is yes...

[@martijntjeeh]

So why not interest before tax? Because if you do EBIT * 1-tax rate, you get a higher tax rate then you should pay right? Because you pay taxes over your EBT and not over your EBIT?

[@primebkpr]

Thank you

[@lauraalejandra8764]

excellent video !! thanks

[@jyotibarman1247]

Is negative capex plausible? cause in my calculation my capex happens to be a neagtive number .(so do i have to add the capex in the formula)

[@Edspira]

Negative capex is not possible; the lowest capex can be is zero

[@Brosef522]

Can you explain why taxes are deducted in order to get to unlevered FCF? Since interest on debt is a pre-tax expense, don't creditors have access to cash flows even before the government?

[@freebarry6155]

Say you have a negative change in NWC. Would that be added back into FCF?

[@brightmind5345]

fine, I can not understand this equation, you subtracted a full charge depreciation expense from a scaled earning before tax and interest which include a component of depreciation which is scaled by the effect of scaling process?. the only interpretation by me. is because of depreciation might be described as a tax shield component. because its effect inside the formula was to mitigate the tax effect then I should be adjusted with its full charge, please correct me if i am wrong, and thanks.

[@zena-zena-zena]

Thank you very much very helpful 👍🏽

[@kelseysobomehin6416]

Thank you, thank you, thank you!

[@niteshsonar9458]

Sir, why we are not considering the tax being saved on interest expenses as we will not pay the tax that is saved from interest expenses and the whole amount will be available for the lenders and the equity holders

[@iAliAbdallahYT]

A great video & explanation. But what if the firm gets an operating loan to finance its CAPEX or operating expenses? Are the loan inflow and its repayments included in the calculation of FCF???

[@shawn576]

+Ali Abdallah Nope. Issuing bonds and equity are not part of FCF. It's simply cash from operations less capital expenditures. If the capital expenditures exceed the cash from operations, the company has negative FCF. Tesla Motors is a good example of this. The company's net cash increases due to financing activities, but FCF is extremely negative, meaning the business is not at all sustainable. The FCF calculation shows why a stock like Tesla is a very high risk speculation, but a company like Hershey is a very low risk investment. One should also compare the capex to the reported depreciation. If the depreciation is consistently larger than capex over a span of several years, it means the business is slowly liquidating itself, which is very bad.

[@sovanaphumprak2410]

If the interest have to be there, why not CFC= EBT*(1-t) + Interest +...? We would get a higher value (more cash) as interest tax shield would not be substracted as in the EBIT.

[@EOCmodernRS]

I got an excercise today without any revenue, and without any capex. What do I do?

[@presley6004]

Hi there, I am just wondering if there's no capEX been given, does is mean the increase in working capital is zero as well?

[@khushpindersingh686]

The tax rate is applicable on EBT. I suppose this is an example for illustrative purpose.

[@satyam7299]

This was my concern too... But he kinda explained a bit of it mid-video.. Pay close attention from 2:50 or so

[@Clifffffffffford]

Thanks!

[@AYK-stronger]

Why are you adding back depreciation to EBIT(1-t)? EBIT should rightfully be subtracted and not added back, because it reflects how much wear & tear the PPE has gone through; regardless of whether or not it is a non-cash expense or not? If you subtract depreciation expense from I/S, I guess the logic is that since that depreciation is not really cash leaving the Co. it gets added back to FCF because it not actually cash leaving the firm

[@chanbla11mit]

Thanks Homer

[@fredweasley6182]

You sound like you'd be a country singer.

[@Edspira]

lol, I don't think you want to hear me sing!

[@MaartenvanRossemLezingen]

What's the point of knowing a company's free cash flow?

[@worldshaper1723]

Maarten van Rossem Lezingen Because Free Cash Flow * 5 = The Value of your company.

[@Oetti]

said Kevin O'Leary once or twice, *depending on the type of company*

[@burakakyon4319]

Great! It is an excellent and fundamental question. As Warren Buffet suggests that accounting can be very speculative and far away from the truth. For example, companies can show profit in a year by using the magical hands of accounting. The free cash flow is basically showing the cash that left over, after paying and deducting all of its expense. It is very good method to understand whether company is healthy or not.

[@mjassar8603]

thaaaaaaaaaaaaaaaaaaaaaank u !!!!

[@NatureandSpirit111]

Can you take net income and add the taxes back in?

[@ofir-bar-softr]

Why do we care about the change in Net Working Capital? How it comes into play? And regarding Depreciation, why is Amortization being left behind? It usually comes together in such cases isn't it?

[@nlcc09]

Changes in working capital signals either decrease or increas in cash for example when trade payable decrease it means u hv paid hence decrease in cash

[@nlcc09]

Amortization is also taken into account just like depreciation. Depends with what you are given

[@mustaphamekhatria]

Nice video :)

[@Firekid144]

You are Harvard level my friend, very well explained!!

[@rickjacoby4542]

Not sure why you won't just use EBITDA instead of EBIT but videos are great.

[@Pain420]

I think depreciation is a non-cash expense so the tax shield does not apply to it. Add back depreciation after multiplying EBIT by (1-t) because depreciation is non-taxable.

[@mozpassion8996]

What if there is a decrease in NWC?

[@Edspira]

You'd simply be subtracting a negative number, or adding the difference. Good question Pk!

[@mozpassion8996]

So to calculate the inc NFA I have to do the NFA for both years? Then subtract one to the other? Sorry didnt understand very well. NFA Y2- NFA Y1?

[@nitinbhalla3391]

Free Cash Flow (Best One)

[@ntcuong01ct1]

Dear Friends, In reality with the chain of shop, we can calculate the FCF for each shop and calculate FCF of the chain. How do you think?

[@Clifffffffffford]

👍

[@mariohorvat6198]

best fcking explenation hala luya

[@Edspira]

Thanks!

[@nitinbhalla3391]

Corporate valuation

[@asinicalnarcissist9520]

rip my uni grades

[@fritzki1]

Hi. I thought net working capital includes cash?

[@Miossoty1]

Sigh...

[@jamesfeldman4234]

Don't believe this video. Cash flows aren't going to be "free." It takes a lot of work and effort to generate cash flows.

[@ritzkola2302]

Shut your dumbass up!

[@GetRich101]

I have used 2 FCF Methods One from this video and the other form Jaime's youtube channel From this video's method I got FCF of -19 Million From Edspira's method I got FCF of 6.5 Million LMAO 😂😂😂😂😂😂😂😂😂😂

[@jomsurangphongphanich6606]

Thank you so much

[@mozpassion8996]

What if there is a decrease in NWC?