I'm working on fundamental analysis on a public company, and am trying to calculate the Free Cash Flow for Facebook (FB) for the latest quarter - ending Sep 30, 2015, as shown below and would like to confirm I am not making any critical errors:
FCF = EBIT * (1 - tax rate) + (depreciation and amortization) - (changes in working capital) - (capital expenditures)
which is equivalent to:
FCF = EBIT * (1 - (income tax expense / EBIT)) + (depreciation + accumulated amortization) - (total assets - total liabilities) - (capital expenditures)
FCF = 1,432,000 * (1 - (536,000 / 1,432,000)) + (1,243,000 + 0) - (40,184,000 - 4,088,000) - (-1,831,000)
FCF = -32,125,568
Questions to answer
- Is the FCF being calculated correctly?
- If not, please explain what is incorrect and please walk through the steps to calculate the correct FCF for Facebook for the latest quarter, using the data provided by Yahoo Finance and explain how you got to the final number
- What is indicated by a company with a negative FCF value?
Thanks in advance
I am getting the financial data from Yahoo Finance:
Income Statement Used: http://finance.yahoo.com/q/is?s=FB+Income+Statement&quarterly
Balance Sheet Used: http://finance.yahoo.com/q/bs?s=FB+Balance+Sheet&quarterly
Cash Flow Used: http://finance.yahoo.com/q/cf?s=FB+Cash+Flow&quarterly