The AI (ChatGPT) Dividend Handbook: What is Free Cash Flow to Equity?

Here is the response from ChatGPT for the prompt FCFE on March 21, 2023.

FCFE stands for Free Cash Flow to Equity. It is a financial metric that represents the cash flow available to a company's equity holders after all capital expenditures, working capital investments, and debt repayments have been made.

FCFE is calculated by subtracting capital expenditures, changes in working capital, and debt repayments from a company's operating cash flow, and adding back any interest payments made to debt holders. The resulting figure represents the cash flow that is available to distribute to shareholders, either as dividends or for reinvestment in the business.

FCFE is often used by investors and analysts to evaluate a company's financial health and its ability to generate cash flow that can be used to pay dividends, buy back stock, or invest in growth opportunities. It can also be used to estimate the intrinsic value of a company's stock, based on its expected future cash flows.