R/Calculate_FCFF.R

In JancoS/EquityR: Common stock valuation methods. Including single stage DDM, multistage DDM and basic CF models. Package mainly builds on the tidyquant and finreportr packages.

#' @title Calculate_FCFF
#' @description The function calculates the free cash flow to firm (FCFF) using the cash flow financials from GetCashFlow function and the Morningstar data. The FCFF is calculated from the Net Income, Change in working capital, depreciation expense and Capital expenditures (CAPEX).
#' @param Ticker Ticker of the stock to be evaluated
#' @param year Year to calculate FCFF for
#' @export
#' @seealso \code{\link[finreportr]{GetCashFlow()}}
#' @return FCFF Returns the calculated FCFF
#' @examples  {
#'
#' Ticker <- "AAPL"
#' year <- 2017
#' FCFF_AAPL_2017 <- Calculate_FCFF(Ticker, year)
#'
#' }

Calculate_FCFF <- function(Ticker, year) {

  # Get Cash flow and Income Statement data

  CF_Data <- GetCashFlow(Ticker, year)

  Fin <- tq_get(Ticker, get = "Key.ratios") %>%
    filter(section == "Financials") %>%
    select(data) %>% unnest()

  # Only include data from the year provided by user

  CF_Data <- CF_Data %>%
    mutate(What_Year = year(endDate)) %>%
    filter(What_Year == year)

  # Start by finding the NI

  NI <- CF_Data %>%
    filter(Metric == "Net Income (Loss) Attributable to Parent")

  # Only keep most recent number

  if (nrow(NI) > 1) {

    NI <- as.numeric(NI %>% filter(row_number() == nrow(NI)) %>% pull(Amount))

  } else{

    NI <- as.numeric(NI  %>% pull(Amount))

  }

  # Get the CAPEX

  CAPEX <- as.numeric(CF_Data %>%
    filter(Metric == "Payments to Acquire Property, Plant, and Equipment") %>% pull(Amount))

  # Get Depreciation expense

  Dep_Expense <- as.numeric(CF_Data %>%
    filter(Metric == "Depreciation, Amortization and Accretion, Net") %>% pull(Amount))

  # Calculate the change in working capital

  WC <- Fin %>%
    filter(category == "Working Capital USD Mil")

  WC_old <- WC %>%
    filter(row_number() == (nrow(WC) - 1)) %>% pull(value)

  WC_new <- WC %>%
    filter(row_number() == nrow(WC)) %>% pull(value)

  change_in_WC <- WC_new - WC_old

  # Calculate FCFF

  FCFF <- NI + Dep_Expense - CAPEX - change_in_WC

  return(FCFF)

}