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30 May, 13:19

How to calculate the free cash flow of the firm (also referred to as the firm's free cash flow) directly?

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  1. 30 May, 13:24
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    The formula to compute the free cash flow of the firm is shown below:

    = EBIT * (1 - Tax Rate) + Depreciation & Amortization - Change in Net Working Capital - net capital Expenditure

    In this we deduct the changes in net capital and net capital expenditure and added the depreciation and amortization expenses to the Earning after tax so that the correct amount can be computed
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