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When calculating free cash flow to equity, we adjust the capex+working capital+depreciation numbers so that it represents only the equity portion. That makes sense because the equity shouldn't be responsible for all the cash outflows of the firm. However, when I think about the physical cash that's left for equity holders, it's after all capex + working capital etc. is paid out. Again, I can't reconcile the two arguments. Why do we take a percentage of capex + working capital items? Read More