Finance

Unlevered Free Cash Flow Calculator

Calculate unlevered free cash flow (UFCF) for company valuation. Essential for DCF analysis and comparing companies.

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Unlevered free cash flow
$27,500,000
Cash available to all investors
EBIT
$50,000,000
Tax rate
25%
EBIT after tax
$37,500,000
+ D&A
$10,000,000
- CapEx
$15,000,000
- Change in NWC
$5,000,000
UFCF
$27,500,000

What Is Unlevered Free Cash Flow?

Unlevered free cash flow (UFCF) represents the cash a company generates from its operations before considering the impact of debt financing. It's the cash available to all capital providers, both equity and debt holders.

The UFCF Formula

UFCF=EBIT×(1−Tax Rate)+D&A−CapEx−ΔNWC\begin{aligned} \text{UFCF} &= \text{EBIT} \times (1 - \text{Tax Rate}) \\ &\quad + \text{D\&A} - \text{CapEx} - \Delta\text{NWC} \end{aligned}

Where:

  • EBIT = Earnings Before Interest and Taxes
  • D&A = Depreciation & Amortization
  • CapEx = Capital Expenditures
  • NWC = Net Working Capital

Why Use UFCF?

UFCF is valuable because it:

  • Is capital structure neutral: Allows fair comparison between companies with different debt levels
  • Is essential for DCF valuation: Used to calculate enterprise value
  • Shows true operational performance: Focuses on core business cash generation

UFCF vs Levered Free Cash Flow

MetricAvailable toAccounts for Debt
UFCFAll investorsNo
LFCFEquity holders onlyYes

DCF Valuation Steps

  1. Project future UFCF
  2. Calculate terminal value
  3. Discount to present value using WACC
  4. Sum to get enterprise value
  5. Subtract net debt to get equity value

Example Calculation

Given:

  • EBIT: $50M
  • Tax rate: 25%
  • D&A: $10M
  • CapEx: $15M
  • Change in NWC: $5M
UFCF=50×0.75+10−15−5=37.5+10−15−5=$27.5M\begin{aligned} \text{UFCF} &= 50 \times 0.75 + 10 - 15 - 5 \\ &= 37.5 + 10 - 15 - 5 \\ &= \$27.5\text{M} \end{aligned}