Accounting & the 3 Statements
Define unlevered free cash flow vs. levered free cash flow. Why does a DCF typically use unlevered FCF?
Model answer
Unlevered FCF (free cash flow to the firm, FCFF) = EBIT × (1 − tax) + D&A − capex − increase in net working capital. It is BEFORE interest / financing, so it's the cash available to ALL capital…
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