This unlevered FCF template will show you how to compute the unlevered free cash flows with EBIT, tax, depreciation & amortization, change in NWC, and CapEx.
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Unlevered Free Cash Flow Template
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Unlevered Free Cash Flow (also known as Free Cash Flow to the Firm or FCFF for short) is a theoretical cash flow figure for a business, assuming the company is completely debt-free and thus has no interest expense. Unlevered Free Cash Flow is used in financial modeling to determine the enterprise value of a firm.
The formula for calculating unlevered FCF is:
Unlevered free cash flow = EBIT – Taxes + Depreciation & Amortization – Capital Expenditures – increases in non-cash working capital
Unlevered free cash flow is used to remove the impact of capital structure on a firm’s value and make companies more comparable. Its principal application is in valuation, where a discounted cash flow (DCF) model is built to determine the net present value (NPV) of a business. By using unlevered cash flow the enterprise value is determined, which can easily be compared to the enterprise value of another business.
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