How to Calculate Free Cash Flows of a Company

[@jjholmes8530]

I forgot when the interviewer asked me whether interest will be deducted along with debt repayments from fcff to reach fcfe🤦‍♂🤦‍♂. Got the answer now. Thanks.

[@ramnikjain5187]

Best educational video I have ever seen. Well done. Keep it up.

[@thewallstreetschool]

Glad you liked it!

[@MrVeer58]

Many thanks for explaining and showing the calculations in Excel.

[@thewallstreetschool]

You are welcome!

[@gyanvianeja9461]

I think while considering fcff, tax on interest expense should also be considered, like depreciation, it is also savings taxes.meaning thereby more cash in the hands of firm.

[@Deepak-Raghav]

Sir, in last formula it should be added not deducted.

[@akshaychallani2542]

Please clarify on why it's (1-33%)

[@sriharij4596]

Very good video, I learnt something. Why did you ignore other income in Cash flow ? Is it bcoz they are inorganic income !

[@pratyush8763]

Very well explained, thank you

[@pj3009]

Why did you deduct depreciation twice?

[@vinaykhanna7275]

Lever doesn't have any loan and there is hardly any Capital investment. They don't have any subsidiary also. There main expenditures are in ADVERTISING AND ROYALTY PAYMENT

[@sachinbhawnani2481]

Sir, I think there is always some difference between EBIT and operating profit . In EBIT we add the revenue from operation as well as other income but in operating profit we only include revenue from operations

[@tanishsadhwani730]

Thank you so much.. Wonderfull video

[@avinashkarle5426]

sir please do vedio on forecast of future cash flow calculation

[@fedelicskaaria7289]

Great Video

[@soniabajaj3098]

Sir didn't understood the 33% interest part.

[@shubhamnimje419]

Didn't get why he has deducted interest as a percentage of tax rate. Can someone plz explain?

[@RkChintamani]

Very good video, 👍 kindly do more video on balance sheet analysis and ratio

[@SarveshwarInani]

Sir, in the last formula, it should be added, not deducted. Not a big issue.

[@zigggzaggg]

u said no debt so no interest while calculating taxes for EBIT, then why are you subtracting less amount paid to debtholders ?? can anyone explain

[@kevalgala3925]

Why was interest not considered for calculating FCFF while it was considered for calculating FCFE?

[@vaibhavnamitajain]

Because FCFF is the amount available to debt holders + equity holders & since interest is an item which is paid to debt holders, it is not deducted to calculate FCFF. Similarly, since FCFE is the amount available to only equity holders & interest payment doesn't belong to them, it is deducted.

[@asdi1983]

@@vaibhavnamitajain but he has deducted extra amount of tax on interest

[@shubhamnimje419]

​@@vaibhavnamitajain Didn't get why he has deducted interest as a percentage of tax rate. Can someone plz explain?

[@MsAzizrahman]

First of all, really appreciate your work, very helpful, however, at 22.21 the FCFE calculation is not correct. Proceeds from borrowings +1281 + Repayment of borrowings -949 + Other financial liabilities -204 + financial liabilities 0 = total should be +128. Could you please elaborate on the calculation of 1077?

[@ShaikhNadeem]

Same confusion is with me.. How come he has arrived on that figure?

[@deepakkumar-nc5mk]

Absolutely

[@pavanshurpali9557]

Sir I didn't understand how you took 33% for 2009 Wala period can u please explain little bit more sir🙏🙏🙏

[@iOmKumar03]

Last part why (1-33(

[@dhruvsachdeva4973]

query : if fcff is negative for a company and amount paid to debt holder is negative , then calculation error occurs on subtracting . for example if c11 was negative and c14 being negative , shouldnt we add them rather than subtracting ?

[@sandeshshetty6888]

I believe should have to add to get to FCFE

[@sharvaripawar6941]

Very useful 👍 thanks

[@SonjoeJoseph]

While calculating the amount paid to Debt holders in the video ur mentioning to sum up Financial liabilities, Proceeds from borrowings, Repayment of borrowings & Other financing items. But while u have done the calculation u have left out the Repayment of borrowings is this an error. Do clarify?

[@vaibhavnamitajain]

Check closely. Cell B39 is added in the formula.

[@akshaychallani2542]

@@vaibhavnamitajain u look closely dude.. He has not added B39, He has clicked on that, but b4 putting choma, he had added the next 1 which is b41..the creator of the video has done the biggest flaw here..thats y FCFE is coming more than FCFF.. Because REPAYMENT OF BORROWINGS is not taken.. Please calculate in excel by urself & check & than reply..

[@priteshpatel4102]

Nice explanation. can u make it in hindi ?

[@adityamanral2966]

Should have clarified why we added interest with 1-tax , because the sign of interest payment was negative.

[@BlueHoodieStudios]

FCFE should be lower than FCFF, something went wrong with the formula.

[@angelmaravilla4708]

I haven't seen the video, so the following statement not necessarily apply to this example, but: FCFE can be larger than FCFF when a company's "debt issued" in a specific periodo were larger than the "debt repayment" (FCFF doesn't consider the financial inflow, and FCFE does)

[@Hemant-RK]

Awesome thanks

[@mayanksharma266]

Sir i have completed my b. Com and mcom will it be fruitful for me to learn financial modelling

[@syedshahanrehman7508]

Yes of course

[@pratyush8763]

I think investment in working capital you have done opposite of what it should be.. please recheck and confirm..

[@pullenbalochistan1955]

Depreciation ko Less kar ke hi operating profit aata hai..q ke depreciation operating expense hai..aur ap pher less karo rahe ho depreciation ko jo already less ho choka hai ...? Why

[@ideaawesome]

yes, same confusion. why depri less on EBITDA..,,

[@vinaykhanna7275]

Take the example of Reliance and show your knowledge. You have taken the easiest Company

[@vinaykhanna7275]

Waiting for your RELIANCE BALANCE SHEET REVIEW.

[@purudate4049]

Rudimentary presentation. You could have compressed entire presentation to less than 10 minutes of capture. I strongly recommend you to replace this clip with far better sleek presentation. You have wasted time in editing the spreadsheet, typo errors which spoils the attention.