FCFF vs FCFE Reconciliation Template Strictly Confidential
Notes
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FCFF to FCFE FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025
Inputs
Debt Ratio 16.8%
Terminal growth rate 2.0%
Cost of equity 7.6%
Pre-tax cost of debt 5.6%
After-tax cost of debt 3.9%
Cost of capital 7.0%
Static Capital Structure Assumption
End-of-year value of the firm 2,506.2 2,574.3 2,631.2 2,679.4 2,724.0 2,778.8 2,835.3 2,892.0
End-of-year debt 407.2 421.1 432.6 442.1 450.2 457.7 466.9 476.4 485.9
Free Cash Flow to the Firm
EBIT 86.6 102.5 116.0 125.7 131.2 131.9 174.5 180.5 176.8
Tax Rate, % 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0%
EBIT x (1 - Tax Rate) 71.8 81.2 88.0 91.8 92.3 122.1 126.4 123.8
Add: Depreciation & amortization 207.5 201.8 197.9 196.5 198.1 156.1 149.1 150.3
Add: Stock-based compensation 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0
Less: Change in WC (0.3) (2.1) (0.3) (0.4) (0.3) (0.3) (0.3) (0.3)
Less: CAPEX (ex. Acquisitions + Divestitures) 200.0 185.0 170.0 160.0 155.0 150.0 145.0 140.0
FCFF 85.6 106.0 122.2 134.7 141.7 134.6 136.7 140.4
Terminal value 1.0 2.0 3.0 4.0 5.0 6.0 7.0 2,892.0
Present Value 80.0 92.7 99.9 102.9 101.3 89.9 85.4 1,771.2
Value of Firm 2,423.2
Value of Equity 2,016.1
Value of Debt 407.2
Free Cash Flow to Equity
EBIT 86.6 102.5 116.0 125.7 131.2 131.9 174.5 180.5 176.8
Interest Expense 22.9 23.7 24.3 24.8 25.3 25.7 26.2 26.8
EBT 79.6 92.3 101.4 106.3 106.6 148.7 154.3 150.1
Taxes 23.9 27.7 30.4 31.9 32.0 44.6 46.3 45.0
Net Income 55.7 64.6 71.0 74.4 74.6 104.1 108.0 105.0
Add: Depreciation & amortization 207.5 201.8 197.9 196.5 198.1 156.1 149.1 150.3
Add: Stock-based compensation 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0
Add: New Debt Issued 13.9 11.5 9.5 8.1 7.5 9.2 9.5 9.5
Less: Change in WC (0.3) (2.1) (0.3) (0.4) (0.3) (0.3) (0.3) (0.3)
Less: CAPEX (ex. Acquisitions + Divestitures) 200.0 185.0 170.0 160.0 155.0 150.0 145.0 140.0
FCFE 83.5 100.9 114.7 125.4 131.5 125.8 127.8 131.2
Terminal value 2,406.1
Present Value 77.6 87.2 92.2 93.7 91.3 81.2 76.7 1,416.1
Value of Equity 2,016.1
Check? 1
