In this video, we look at Free Cash Flow example in excel. Here we calculate FCFF of Alibaba IPO and Box IPO and contrast their free cash flows.

Free Cash Flow Example 1 - Calculate FCFF of Alibaba IPO
- We calculate FCFF using the EBIT formula here
- We note that Free cash flow of Alibaba is positive and stable.
- Since FCFF is positive in future years, we can use Discounted Cash Flow valuation to value Alibaba

Free Cash Flow Example 2 - Calculate FCFF of Box IPO
- Here again, we calculate FCFF using EBIT formula
- However, FCFF of Box is negative and is in a dismal state.
- Also, FCFF is negative not only in the next few years, but when we do projections over a longer period of time, still is comes out to be negative
- therefore, we cannot use DCF valuation here. We must apply relative valuation method to value Box.

You can download the FCFF Excel template here - https://www.wallstreetmojo.com/free-c...

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