What is the correct formula for calculating unlevered free cash flow? I have seen many different formulas online.
EBIT (or operating income) * (1 - tax rate) + Depreciation + Amortization - change in net working capital - capital expenditures.
or
cash flow = EBIT – Taxes + Depreciation & Amortization – Capital Expenditures – increases in non-cash working capital
or
EBITDA - CapEx - working capital - Taxes
| +197 | Americas M&A League Table Q2 Updated | 79 | 3h |
| +131 | Restructuring: Anti-climactic Experience | 34 | 1d |
| +102 | IB Net Worth / Savings Check | 49 | 25m |
| +91 | Woman who emptied Knicks trashcan on street then stole it was DEI exec, worked at JPMorgan Chase | 24 | 13h |
| +80 | Stop sleeping on UBS - it’s pretty good | 26 | 2h |
| +52 | 2026 VAULT PRESTIGE RANKINGS | 29 | 1d |
| +39 | AI + Financial Modelling | 12 | 1d |
| +30 | Hardest interview experiences? | 16 | 23h |
| +28 | Summer before college | 17 | 13h |
| +26 | Current State of UBS in North America | 8 | 2d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Yeah, here's the thing; all of the formulas you just listed give the same result.
I think the only thing to note is that you have to multiply the EBIT by (1-T) and then go ahead and complete all of the other necessary calculations. (+D&A - capex - CINWC).
Another way to derive UFCF is to take operating cash flow from your cash flow statement and deduct capex.
ALL THREE OF THOSE FORMULAS ARE THE SAME! lol
You just listed 3 things and they're all EBIT - Taxes + noncash expenses +- change in WC - CAPEX
Ad ut voluptate quia sit tempora. Odit non enim officia est beatae. Est enim magnam maiores non in quis. Error quasi vero ea rerum pariatur. Exercitationem qui commodi officia fugit explicabo dolor. Excepturi repudiandae ad qui minima et aliquid. Ut quaerat velit debitis.
Suscipit quas ipsum accusamus illum et cum suscipit corrupti. Et molestiae quae excepturi cum rerum quaerat. Qui odio reprehenderit saepe alias facilis.
Id provident velit ipsam non at. Sed autem saepe exercitationem tenetur quia temporibus ea. Recusandae dolor labore aperiam nesciunt laboriosam error. Laboriosam iure atque sit nobis et vero.
Ut temporibus qui magnam nesciunt distinctio quidem. Quaerat libero qui ullam sit. Voluptate et sit ipsam ex ab ut.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...