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for calculating gross free cash flow to equity, it’s
gross free cash flow to equity = OPERATING CASH FLOW + dividends from joint ventures – net interest paid – tax
For this operating cashflow (in big cap), it can either also be FREE CASH FLOW ? when there’s an incremental working capital investment or non current asset investment ?
Therefore can we say that this operating cashflow in the gross free cash flow to equity can be used interchangeably with FREE CASH FLOW ?
thanks john !
Free cash flow is the net cash flow (as you would calculate for an ordinary project). So it is the operating cash flow together with changes in working capital and with tax.
Free cash flow to equity is exactly the same except that it also includes the payment of debt interest (and the cash flows from raising and repaying debt).
So look at the relevant chapter of our free lectures notes where this is explained, with examples.
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