Free Cash Flow = Net Cash Flow from Operating Activities-Purchase of PPE+Proceed from Disposal of PPE.Correct?
Free Cash Flow = Net Cash Flow from Operating Activities – Purchase of Property, Plant & Equipment.
Should I add “Proceed from Disposal of Property, Plant & Equipment” into the Free Cash Flow Formula above ?
Kindly advise. Thank you.
Yes, but keep in mind asset sales aren’t recurring, so the sale of PPE isn’t part of recurring or measurable FCF, and doesn’t properly measure results from operations.
Also, don’t forget to adjust for non-cash charges(depreciation, amortization, depletion). Add depreciation back in to get total FCF.
Hope that helps.
Personal Protective Equipment (Spanish)
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