Unlevered Free Cash Flow

Definition

Unlevered Free Cash Flow is cash flow from operations minus capital expenditures and changes in working capital, not taking into account interest or debt.

Usage and Context

Unlevered free cash flow is operating cash flow minus capital expenses, excluding interest and debt.

Frequently Asked Questions

Does unlevered mean no debt?
Yes, unlevered means the company or investment has no debt.

Why does FCF not include interest?
FCF (Free Cash Flow) does not include interest because it represents the cash available to the company before financing costs, focusing on operating efficiency.

Can you have negative unlevered free cash flow?
Yes, you can have negative unlevered free cash flow if a company’s operating costs and capital expenses are higher than its operating income.

Related Software

Excel, QuickBooks

Benefits

Unlevered free cash flow shows available cash for investment, indicating operational efficiency.

Conclusion

Unlevered free cash flow highlights available cash for investments, reflecting operational efficiency.