Free Cash Flow Per Share (FCFPS)
factor.formula
Average total equity:
Average total share capital is a common denominator used when calculating per-share indicators. In order to more accurately reflect the share capital situation during the entire period, the average of the total share capital at the beginning and end of the period is used. This can smooth the impact of changes in share capital, such as stock repurchases or additional issuances.
Free cash flow per share:
Free cash flow per share is calculated by dividing the free cash flow for the last 12 months by the average total shares during that period. The free cash flow for the last 12 months (TTM) refers to the total free cash flow generated by the company in the last 12 months.
This formula calculates the free cash flow per share where:
- :
The average total share capital is the average of the total share capital at the beginning and end of the period.
- :
Total free cash flow for the last twelve months, which is generally defined as cash flow from operating activities less capital expenditures.
factor.explanation
Free cash flow per share (FCFPS) is an important valuation indicator that represents the free cash flow per share of a company after paying all operating and capital expenses. It better reflects the company's true cash generation ability than traditional earnings per share (EPS) because it takes into account not only profits but also capital expenditures. The higher the FCFPS, the stronger the company's financial strength and ability to create value for shareholders. Investors can compare it with other companies' FCFPS and historical data to evaluate the company's valuation and growth potential.