Sem2

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PGA

SEMINARIO
INTEGRADOR
DE FINANZAS

Free Cash Flows
Free cash flow: cash flow that is free and
available to be distributed to the firm’s
investors (both debt and equity investors)

Free Cash
Flows
Dr. Roberto Santillán

PGA

Calculating Free Cash Flows:

Free Cash Flows
Firm’s Operating Free
cash flows

Cash flows generated
through the firm’s
operations and
investments in assets

=

=

An Operating Perspective

Firm’s Financing Free
cash flows

Cash flows paid to - or
received by - the firm’s
investors (creditors &
stockholders)

PGA

After-tax cash flow
from operations
less
investment in net
operating working
capital
less
investments in fixed
and other assets

PGA

Calculating Free Cash Flows:

Calculating Free Cash Flows:

An Operating Perspective

An Operating Perspective
After-tax cash flow
from operations
less
investment in net
operating working
capital
less
investments in fixed
and other assets

PGA

Operating income
+ depreciation
- cash tax payments

[Change in current
assets]

-

[change in noninterest bearing
current liabilities]

After-tax cash flow
from operations
less
investment in net
operating working
capital
less
investments in fixed
and other assets

Change in gross
fixed assets, and
any other assets
that are on the
balance sheet.

PGA

D.R. Universidad TecVirtual del Sistema Tecnológico de Monterrey, 2013

1

Calculating Free Cash Flows:

A Financing Perspective
Interest payments to creditors
-

PGA

dividends paid to stockholders

-

=

change in debt principal

change in stock
Derechos Reservados MMXIII
Prohibida la reproducción total o parcial de esta obra
sin expresa autorización del Tecnológico de Monterrey.

Financing Free Cash Flows
PGA

D.R. Universidad TecVirtual del Sistema Tecnológico de Monterrey, 2013

2

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