How to Calculate Free Cash Flow in a DCF Analysis

What You’ll Learn In This Video

In this lesson, you’ll learn what “Free Cash Flow” means in a DCF analysis – and how to calculate it using a real-world example, how to modify the cash flow statement appropriately, and the difference between Levered and Unlevered Free Cash Flow – plus, FCF vs. EBITDA vs. EPS.

Hey there,

Welcome to our first hidden, bonus tutorial. We don’t openly advertise this one because we like to reward you for paying close attention to your email and opening messages from us.

In this lesson, I’m going to tackle a very common question in interviews and a common point of confusion on the job: how to calculate Free Cash Flow (FCF).

Here’s what we’ll cover in the video above:

-How FCF differs from EBITDA and EPS, and when you use which metric.

-What the deal is with Working Capital in a DCF, and how you factor it in properly.

Levered vs. Unlevered Free Cash Flow, and when you use which metric.

-How to project Free Cash Flow over 5-10 years in a DCF.

Enjoy, and make sure you also check out our quick reference guide to Free Cash Flow as well!

-Brian

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DCF Tutorial

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