What is Cash Available for Distribution?
Cash Available for Distribution represents the cash generated from the company's operations that is available for distribution to investors without compromising the company's ability to maintain or grow its operations.
The calculation of CAFD typically starts with a company's net income and then makes adjustments for non-cash expenses, changes in working capital, and capital expenditures to arrive at the cash available for distribution.
CAFD is a critical metric for investors in MLPs and similar entities because it provides insights into the company's ability to generate cash flow that can be distributed to shareholders or unitholders. A company with strong and stable CAFD can be attractive to income-oriented investors seeking consistent cash distributions. However, it's essential to consider other factors, such as the company's growth prospects, financial stability, and industry trends, when evaluating an investment based on CAFD.
How to Calculate Cash Available for Distribution?
Cash Available for Distribution calculator uses Cash Available for Distribution = Funds from Operations+Non-Recurring Items-Capital Expenditures to calculate the Cash Available for Distribution, The Cash Available for Distribution is a financial metric used primarily by master limited partnerships (MLPs) and other similar entities to measure the cash flow available to be distributed to shareholders or unitholders after covering all operating expenses, capital expenditures, and debt service requirements. Cash Available for Distribution is denoted by CAD symbol.
How to calculate Cash Available for Distribution using this online calculator? To use this online calculator for Cash Available for Distribution, enter Funds from Operations (FFO), Non-Recurring Items (NRI) & Capital Expenditures (CAPEX) and hit the calculate button. Here is how the Cash Available for Distribution calculation can be explained with given input values -> 480000 = 360000+430000-310000.