Unlevered Free Cash Flow - UFCF


DEFINITION of 'Unlevered Free Cash Flow - UFCF'

A company's cash flow before interest payments are taken into account. Unlevered free cash flow can be reported in a company's financial statements, and shows how much cash is on hand to pay for operations before other financial obligations are taken into account.

Unlevered Free Cash Flow = EBITDA - CAPEX - Working Capital - Taxes

The smaller the gap between unlevered cash flow and leveraged cash flow, the smaller amount of unobligated cash the company has on hand, and the company is more likely to run into problems if revenue streams dry up.


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BREAKING DOWN 'Unlevered Free Cash Flow - UFCF'

A company that has a large amount of outstanding debt - one that is highly "leveraged" - is more likely to report unlevered free cash flow because it provides a rosier picture of the company's financial health. The figure shows how assets are performing in a vacuum, because it ignores the payments made for debt incurred to obtain those assets. Investors have to make sure to take into account debt obligations, since highly leveraged companies are at greater risk for bankruptcy.

  1. Capital Expenditure (CAPEX)

    Capital expenditure, or CapEx, are funds used by a company to ...
  2. Working Capital

    Working capital is a measure of both a company's efficiency and ...
  3. Levered Free Cash Flow

    The free cash flow that remains after a company has paid its ...
  4. Operating Cash Flow - OCF

    Operating Cash Flow (or OCF) is a measure of the amount of cash ...
  5. Earnings Before Interest, Taxes, ...

    An indicator of a company's financial performance which is calculated ...
  6. Free Cash Flow - FCF

    A measure of financial performance calculated as operating cash ...
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  1. What are some tactics businesses can use to increase unlevered free cash flow?

    Unlevered free cash flow is defined as earnings before interest taxes, depreciation and amortization (EBITDA) less capital ... Read Full Answer >>
  2. Why is unlevered free cash flow important when reviewing a company's finances?

    Unlevered free cash flow is important when reviewing a company's financials because unlevered free cash flow measures the ... Read Full Answer >>
  3. What does a high unlevered free cash flow indicate about a business?

    A high unlevered free cash flow can indicate a business has a large amount of cash flow in excess of its capital expenditures, ... Read Full Answer >>
  4. What's the difference between levered and unlevered free cash flow?

    The difference between levered and unlevered free cash flow is expenses. Levered cash flow is the amount of cash a business ... Read Full Answer >>
  5. What is a profit and loss (P&L) statement and why do companies publish them?

    A profit and loss (P&L) statement, or balance sheet, is essentially a snapshot of a company's financial activity for ... Read Full Answer >>
  6. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>

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