Free Cash Flow to Equity (FCFE)
Free Cash Flow to Equity (FCFE) is the cash flow available to a company’s common equity holders after all operating expenses, reinvestment needs, and net payments to (or from) debt holders have been accounted for. Unlike FCFF, FCFE is a levered cash flow measure and should be discounted at the Cost of Equity, not the Weighted Average Cost of Capital, when used to value equity directly.
The formula is as follows:
\[\text{FCFE} = \text{Net Income} + \text{Depreciation and Amortization} - \text{Capital Expenditure} - \text{Change in Net Working Capital} + \text{Net Borrowing}\]Also known as: FCFE, levered free cash flow.
Free Cash Flow to Equity (FCFE) in Python
get_free_cash_flow_to_equity is part of the Models module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_free_cash_flow_to_equity as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "MSFT"], api_key="FINANCIAL_MODELING_PREP_KEY")
toolkit.models.get_free_cash_flow_to_equity().loc["AAPL"]
Which returns:
| 2021 | 2022 | |
|---|---|---|
| Net Income | 9.4680e+10 | 9.9803e+10 |
| Depreciation and Amortization | 1.1284e+10 | 1.1104e+10 |
| Capital Expenditure | 1.1085e+10 | 1.0708e+10 |
| Change in Net Working Capital | 4.911e+09 | -1.2e+09 |
| Net Borrowing | 1.1643e+10 | -4.078e+09 |
| Free Cash Flow to Equity | 1.01611e+11 | 9.7321e+10 |
Parameters
get_free_cash_flow_to_equity accepts the following parameters:
- rounding (int, optional): The number of decimals to round the results to. Defaults to None.
- growth (bool, optional): Whether to calculate the growth of the values. Defaults to False.
- lag (int | list[int], optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int | None, optional): The trailing period to use for the calculation. Defaults to None.
- show_columns (list[str] | None, optional): List of columns to show in the results. If None, all columns will be shown. Defaults to None.