Glossary

Unlevered Free Cash Flow

Unlevered free cash flow (UFCF) represents a company's capacity to produce cash flow from its operations while factoring in capital expenses.

What is Unlevered free cash flow?

Unlevered free cash flow (UFCF) represents a company's capacity to produce cash flow from its operations while factoring in capital expenses.

It is calculated as-

UFCF = Operating Cash flow - Capital Expenditures

It remains "unlevered," disregarding the company's debt obligations. UFCF serves as a pivotal metric for evaluating a company's financial health and attractiveness to potential investors.

What are the differences between Levered and Unlevered Cash flows?

Unlevered free cash flow (UFCF) demonstrates the cash flow a company could generate without any debt or interest expenses. On the other hand, levered free cash flow (LFCF) mirrors the cash flow if all debt and interest expenses were removed while maintaining the existing debt level.