Difference between FCF and NPV

This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.

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February 5, 2017 at 8:06 pm #371235
ahmed9729
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My question is, how is Free cash flow different from NPV calculation?
In both cases, we do the same things like calculating tax on EBIT and subtracting capital expenditure and adding decrease in net working capital and subtracting increase in net working capital and adding scrap value and depriciation. In the end, we discount it at the WACC to get the PV.
So what is the difference? I am a bit confused.
February 6, 2017 at 8:48 am #371277
John Moffat
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There is no difference. With NPV’s we are usually looking just at individual projects, with FCF we are usually looking at the whole business, but the thinking is exactly the same.
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