TTM Free Cash Flow to Firm

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Formula

TTM FCFF = TTM Cash from Operating Activities + TTM Interest Expense × (1 − TTM Effective Tax Rate) − TTM Capital Expenditures

Reference

Non-GAAP measure: Regulation G and Regulation S-K Item 10(e)

Source

Calculated by GeminIQ from figures reported in SEC filings

TTM free cash flow to the firm (FCFF) is the cash a company generated over the trailing twelve months that is available to all of its capital providers, lenders and shareholders together, after it has paid operating costs, taxes, and capital expenditures. It is commonly calculated as TTM operating cash flow plus TTM after-tax interest expense minus TTM capital expenditures.

It is often called unlevered free cash flow, because it measures the business's cash generation as if it carried no debt. It is not a GAAP line item and is calculated from figures reported in SEC filings.

The calculation starts from operating cash flow (NetCashProvidedByUsedInOperatingActivities in XBRL). Under ASC 230, interest paid is an operating cash flow, so reported operating cash flow is already net of interest. Adding back interest expense (InterestExpense), multiplied by one minus the TTM effective tax rate, restores the cash that went to lenders while keeping the tax saving that interest produced out of the result. Subtracting capital expenditures, usually PaymentsToAcquirePropertyPlantAndEquipment taken at absolute value, leaves free cash flow to the firm.

Every input covers the four most recent quarters. 10-Q cash flow statements are cumulative for the fiscal year, so the trailing amounts are built from year-to-date figures, with the fourth quarter equal to the 10-K amount minus the nine-month amount from the third-quarter 10-Q. The tax rate is TTM tax expense over TTM pretax income, not an average of quarterly rates. An alternative route starts from EBIT: EBIT times one minus the tax rate, plus depreciation and amortization, minus capital expenditures and the increase in working capital. The two approaches rarely match exactly, because operating cash flow includes items that the EBIT route leaves out.

FCFF is the cash flow that a discounted cash flow model discounts at the weighted average cost of capital to estimate enterprise value. It also pairs with enterprise value as a multiple or yield, since both cover debt and equity. Free cash flow to equity, by contrast, subtracts payments to lenders and is valued against market capitalization.