Aswath Damodaran
Session 23: FCFE, Dividends and Cash Balances
1:33:34
After the quiz, in a shortened class, we moved on to look at how much a company can afford to pay out as dividend. This measure, that I titled FCFE, is the cash left over after taxes, reinvestment needs and net debt payments. When a company pays out less than its FCFE, it is accumulating cash, and we laid the foundations for analyzing dividend policy by asking the key question: do you trust…