Short Definition

Total value of the business after taking out the amount owed to debt holders. Wikiwealth uses a free cash flow to the firm approach in their valuations to derive the value of the entire operating entity. Interest-bearing debt is subtracted from that value to derive the value to equity holders (net present value of free cash flow).

Long Definition

See also

• Equity Capital
• Equity Percentage of Capital
• Equity Risk Premium
• Equity Value
• Required Return of Equity
• Weight Average Cost of Capital (WACC)

See Related Resources

• Adv Cash Flow Template
• Basic Cash Flow Model
• Warren Buffett Model
• 1 Stage FCFF
• 2 Stage FCFF
• 1 Stage FCFE
• 2 Stage FCFE
• 3 Stage FCFE
• FCFF vs FCFE Valuation
• FCFF with Negative Earnings
• FCFE with Capitalized R&D
• FCFF with Negative Earnings
• FCFF and EVA
• FCFE with Option to Capitalize
• Reconcile FCFE & Dividend Value

Source: http://en.wikipedia.org/wiki/Equity_(capital)#Equity_capital