Posts Tagged ‘Cost of debt’

Free cash flow to the firm (FCFF) is the cash flow that a company is ‘free’ to distribute to all providers of money (both, debt and equity) without damaging its growth opportunities. Below I explain the process an analyst would go through to estimate free cash flow. Like all forecasts, your FCFF starts with your…

The weighted average cost of capital (WACC) is one of the most important numbers in company valuation, and one of the hardest to estimate accurately. In theory, WACC is a clean formula that blends a company’s cost of equity and after-tax cost of debt into a single discount rate. In reality, every input in that…