Free Cash Flow to Equity Calculator

Calculate Free Cash Flow to Equity

Enter financial data for 3 to 5 years to calculate Free Cash Flow to Equity (FCFE) and intrinsic value per share. All monetary values in Ghanaian Cedi (GHS). Example: Use data for Access Bank Ghana (174 million shares).

FCFE Formula

FCFE = Net Income + Non-Cash Charges - Capex - Change in Working Capital + Net Borrowing

Where Net Income is profit after taxes, Non-Cash Charges are depreciation and amortization, Capex is capital expenditures, Change in Working Capital is the year-over-year change in current assets minus liabilities, and Net Borrowing is new debt minus repayments.

Select Number of Years

Number of Years

Parameters for Intrinsic Value Per Share

Cost of Equity (%)

Perpetual Growth Rate (%)

Start Year

Valuation Year

Shares Outstanding

Current Stock Price (GHS)

Understanding Free Cash Flow to Equity

Free Cash Flow to Equity (FCFE) measures the cash available to shareholders after all expenses, reinvestments, and debt obligations are met. It's a key metric for valuing stocks using Discounted Cash Flow (DCF) models or assessing dividend potential.

Positive FCFE

FCFE > 0

The company generates surplus cash for shareholders, potentially supporting dividends or stock buybacks.

Negative FCFE

FCFE ≤ 0

The company may be reinvesting heavily or facing cash flow challenges, limiting shareholder payouts.

How to Use the FCFE Calculator

Select Number of Years
Choose 3, 4, or 5 years for your FCFE forecast in the "Select Number of Years" section.
Input Annual Financial Data
For each selected year, enter the following in the respective "Year" sections (all in Ghanaian Cedi, GHS):
- Net Income: Profit after taxes from the income statement (e.g., from Yahoo Finance or gse.com.gh).
- Non-Cash Charges: Depreciation and amortization from the cash flow statement.
- Capex: Capital expenditures from the cash flow statement.
- Change in Working Capital: Year-over-year change in current assets minus liabilities from the balance sheet or cash flow statement.
- Net Borrowing: New debt minus repayments from the cash flow statement.
Enter Valuation Parameters
In the "Parameters for Intrinsic Value Per Share" section, provide:
- Cost of Equity (%): The required return for equity investors (e.g., 12-20% for Ghana, calculated using CAPM).
- Perpetual Growth Rate (%): Expected long-term FCFE growth rate (e.g., 3-5% based on Ghana GDP growth).
- Start Year: The year for the first FCFE input (Year 1). Set to the current year (e.g., 2025) for standard DCF or a past year for backtesting.
- Valuation Year: The year for discounting cash flows to present value (typically the current year for standard DCF).
- Shares Outstanding: Total shares outstanding (e.g., 174M for Access Bank Ghana, from gse.com.gh).
- Current Stock Price (GHS): Current market price per share (from gse.com.gh or Yahoo Finance).
Calculate FCFE and Intrinsic Value
Click the "Calculate" button to:
- Compute FCFE for each year using the formula: FCFE = Net Income + Non-Cash Charges - Capex - Change in Working Capital + Net Borrowing.
- Calculate future value (FV) of FCFE starting from the last year's FCFE, using the perpetual growth rate.
- Discount FCFE and terminal value to present value (PV) using the cost of equity, with Year 1 discounted at time period 0.
- Determine intrinsic value per share by dividing total PV by shares outstanding.
Review Results
The results section displays:
- FCFE Calculation Details: A table showing inputs and calculated FCFE for each year.
- Discounted Cash Flow (DCF) Table: Forecasted FCFE, actual years, time periods (starting at 0), FV FCFE, and PV FCFE, including terminal value.
- Key Metrics: Average FCFE, average growth rate, total FV and PV of FCFE, terminal value, total PV, and intrinsic value per share.
- Valuation Comparison: Compares intrinsic value per share to the current stock price to assess if the stock is undervalued, overvalued, or fairly valued.
- Warning: Alerts if negative FCFE values are detected, indicating potential reinvestment or financial challenges.
Reset and Recalculate
Use the "Clear" button to reset inputs or the "Calculate Another" button in the results section to start a new calculation.

Scenario: Future Cash Flows (Standard DCF) Valuation Year: 2025 Cash Flows: 2025 [Year 1] — 2026 [Year 2] — 2027 [Year 3] — Terminal [2028+] Scenario: Past Cash Flows (Backtesting) Valuation Year: 2028 Cash Flows: 2025 [Year 1] — 2026 [Year 2] — 2027 [Year 3] — Terminal [2028+]

Key Applications of FCFE

Valuing stocks using Discounted Cash Flow (DCF) models
Assessing a company's ability to pay dividends or buy back shares
Evaluating financial flexibility for shareholders
Comparing equity cash flows across companies

Download Guide Watch Tutorial

To calculate Free Cash Flow to Equity (FCFE), you need accurate financial data. Here's how to find the required information for global and Ghanaian companies:

Net Income
Find in the income statement:
- Yahoo Finance: Search the stock ticker (e.g., ABG for Access Bank Ghana), go to "Financials" > "Income Statement."
- gse.com.gh: Check financial statements for GSE-listed companies.
- Annual Reports: Access via company websites or annualreportsghana.com.
Non-Cash Charges
Find depreciation and amortization in the cash flow statement under "Operating Activities" (added back to net income).
- Yahoo Finance: Look under "Cash Flow" > "Operating Activities."
- afx.kwayisi.org/gse/: View data for GSE companies.
Capex
Found in the cash flow statement under "Investing Activities."
- Yahoo Finance: Look under "Cash Flow" > "Investing Activities."
- afx.kwayisi.org/gse/: View data for GSE companies.
Change in Working Capital
Calculate as the year-over-year change in current assets minus current liabilities, found in the balance sheet or cash flow statement.
- Yahoo Finance: Check "Cash Flow" or "Balance Sheet."
- Company Reports: Look for working capital details.
Net Borrowing
Calculate as new debt issuances minus debt repayments, found in the cash flow statement under "Financing Activities."
- Yahoo Finance: Look under "Cash Flow" > "Financing Activities."
- gse.com.gh: Check financial statements.
Cost of Equity
Estimate using CAPM: Risk-free rate + Beta × Equity Risk Premium.
- Risk-free rate: Ghana Treasury Bill rates from bog.gov.gh (e.g., 91-day ~10%, 364-day ~13% as of August 2025).
- Beta: From Yahoo Finance or Bloomberg (for Access Bank Ghana, often around 1 for banks if not available).
- Equity Risk Premium: From Damodaran (nyu.edu) ~16.35% for Ghana in 2025.
Perpetual Growth Rate
Use long-term GDP growth or inflation rate for Ghana (~3-5%, from World Bank or IMF projections).
Shares Outstanding
Find in financial statements or key statistics.
- Yahoo Finance: Under "Statistics."
- gse.com.gh: In company profiles (e.g., 174M for Access Bank Ghana).
Current Stock Price
Find the current market price per share.
- Yahoo Finance: Under "Summary" or "Quote."
- gse.com.gh: Check market data for GSE-listed companies.
Tips
- Verify data from multiple sources for accuracy.
- For Ghanaian companies, check gse.com.gh for announcements affecting financials.
- Use historical data for past years and analyst estimates for future projections (Yahoo Finance "Analysis" tab).

Examples:

Access Bank Ghana (ABG): Net Income = GHS 217.5M, Non-Cash Charges = GHS 100K, Capex = GHS 500K, Change in WC = GHS 200K, Net Borrowing = GHS 300K; Cost of Equity = 15%, Perpetual Growth = 3%, Shares = 174M, Current Price = GHS 5.50 (from gse.com.gh).
JPMorgan Chase (JPM): Net Income = $40M, Non-Cash Charges = $3M, Capex = $5M, Change in WC = $2M, Net Borrowing = $3M; Cost of Equity = 10%, Perpetual Growth = 2%, Shares = 2.9B, Current Price = $200 (from Yahoo Finance).