[Verse 1] When a company makes its money flow There's cash that's left after debts they owe To equity holders this treasure goes Free Cash Flow to Equity it shows First we start with net income clear Add back depreciation year by year Subtract the capex that they spend On working capital changes blend [Chorus] FCFE, cash for equity After all the debts are paid you see FCFE, what shareholders receive The money that they can believe Free to equity, free to equity This is how we value what it's worth to be An owner of the company [Verse 2] Take the net borrowing add it in When debt increases cash flows begin But if they pay down what they owe Subtract that from the total flow It's different from FCFF you know That one's for all investors so But FCFE is just for shares The cash that equity holders bear [Chorus] FCFE, cash for equity After all the debts are paid you see FCFE, what shareholders receive The money that they can believe Free to equity, free to equity This is how we value what it's worth to be An owner of the company [Bridge] Net income plus depreciation Minus capex calculation Minus working capital change Plus net borrowing rearrange Equals FCFE that's the key For equity valuation free [Chorus] FCFE, cash for equity After all the debts are paid you see FCFE, what shareholders receive The money that they can believe Free to equity, free to equity This is how we value what it's worth to be An owner of the company [Outro] When you're valuing equity stakes FCFE is what it takes The cash that's truly free to flow To shareholders below
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