easy · Corporate Credit Analysis
What is the primary difference between Free Cash Flow to Equity (FCFE) and Free Cash Flow to the Firm (FCFF)?
- FCFE is calculated before taxes are paid, whereas FCFF is a post-tax metric.
- FCFF is used only for distressed companies, while FCFE is used only for healthy companies.
- FCFF accounts for capital expenditures, whereas FCFE ignores them to focus on dividends.
- FCFE includes the impact of interest payments and net changes in debt, while FCFF excludes them.
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