Free Cash Flows

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October 25, 2013 at 4:36 pm #143687
babarali47
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Assalam walaikum. Peace be upon you. Sir, Why don’t we deduct interest while calculating Free Cash Flow to the Firm? Isn’t interest also an essential expenditure? Thank You. 🙂
October 25, 2013 at 5:04 pm #143694
John Moffat
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If it is free cash flow to equity, then we do subtract debt interest.
However, if it is just free cash flow then it means free cash flow available to all lenders – shareholders and debt lenders. So for that we do not subtract the interest.
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