Understanding Unlevered Free Cash Flow
Unlevered free cash flow is a measure of cash flow available to equity and debt holders from business operations and is used to determine the enterprise value of the company. This figure is important for financial modeling and is used to calculate the net present value of a business.Formula
UFCF = EBIT * (1-tax rate) + Depreciation & Amortization - Capital Expenditures - Change in Non-Cash Working CapitalHow do I calculate the unlevered free cash flow?
To accurately calculate Unlevered Free Cash Flow, it is important to use a combination of tools such as Sourcetable. With these tools, you can use the formula EBIT * (1-tax rate) + Depreciation & Amortization - Capital Expenditures - Change in Non-Cash Working Capital to calculate the Unlevered Free Cash Flow for a given period.
What is Unlevered Free Cash Flow?
Unlevered free cash flow (UFCF) is the cash available to a firm's stakeholders after all obligations and debts have been paid. It is a measure of cash available for expansion and is used in discounted cash flow analysis.
What is the UFCF Function?
The UFCF function is used to measure the amount of cash available to a firm's stakeholders in discounted cash flow analysis. It is calculated using the following formula: UFCF = EBIT (1-T) + Depreciation & Amortization - Capital Expenditures.
Key Points
How do I calculate unlevered free cash flow?
UFCF = EBIT * (1-tax rate) + Depreciation & Amortization - Capital Expenditures - Change in Non-Cash Working Capital
Cash Flow Theory
Unlevered free cash flow is a theoretical cash flow figure for a business and is used in financial modeling.
Capital Structure Impact
Unlevered free cash flow removes the impact of a firm's capital structure on its value.
Comparability
Unlevered free cash flow makes companies more comparable, allowing for better analysis of their worth.
