How to Compute Free Cash Flow from Financial Statements?

[YOGENUDJ]

@YOGENUDJ

Hi All,

I am very new to investing. I don’t know how to calculate Free Cash Flow. As per books,

Free Cash Flow = EBIT(1 - tax rate) + Depreciation - CapEx - Change in Working Capital.

Now I have taken an example of Bharat Electronic for 2008-2009 so that I can compare my results with Free Cash Flow number here on ValuePickr. One can find Annual report for Bharat Electronics here at

Let me explain my calculations

EBIT = PBT +Interest

Tax Rate = 33.99% from EBIT (1 - Tax Rate) **( 1 - 0.3399)

B. Cash From Investing Activities)

= excess of current assets over current liabilities is referred to as the difference between the working capital for two given reporting periods is called the change in working capital.

Working Capital for Year 07- 08 = Net Current Asset (page 55) =

Working Capital for Year 08- 09 = Net Current Asset (page 55) = Capital for Year 08- 09) minus Capital for Year 07- 08)

So from 1, 2, 3 and 4

FCF = (Rs. Cr.)

The above numbers are the FCF value given by ValuePickr.

FCF from Value Pickr Cr.)

Please help

Thanks and Regards,

Yogendra

I figured it out how Free Cash Flow is calculated on ValuePickr

Free Cash Flow = Cash Flow from Operation - Capital Expenditure

= Net Cash From OperatingActivities(page 77) - Capital Expenditure (page 77)

= 3993147 - 1707835

= 2285312

But still there is adifferenceof 2000 Rs (thousand) (from ValuePickr 228.73 Rs Cr)

Can Someone help me fix that difference?

Link: http://www.bel-india.com/images/itm-pdfs/AR_2008-09.pdf http://www.bel-india.com/images/itm-pdfs/AR_2008-09.pdf Link: http://www.bel-india.com/images/itm-pdfs/AR_2008-09.pdf

**Profit Before Tax **(page 56)-**10,968,359 **Rs(Thousands)

Interest(page 56))- 107,685Rs(Thousands)

=10,968,359 +107,685

= 11076044Rs(Thousands)

** http://en.wikipedia.org/wiki/Income_tax_in_India#Corporate_Income_tax Link: http://en.wikipedia.org/wiki/Income_tax_in_India#Corporate_Income_tax

So,

1. **

=11076044

=7311296.644Rs(Thousands)

**
**

2) Depreciation(page 56))- 1,055,977Rs(Thousands)

3) CapEx(page 77) = Purchase of Fixed Assets(Section

1,707,835Rs(Thousands)

**Working Capital:**The

companyas working capital.**Change in Working Capital:**The

26,309,001Rs(Thousands)

31,355,563Rs(Thousands)

4) Change in WC = (Working

(Working

=31,355,563**-**26,309,001

= 5,046,562Rs(Thousands)

7,311,296.644+1,055,977-****1,707,835 -5,046,562= 1,612,876.644Rs(Thousands) = 161.28

waydifferentfrom is228.73(Rs.