EBITDA to Levered Free Cash Flow?
Hi all, hoping you can help clarify something I've been stuck on:
Is there a reason that when building to levered free cash flow starting from EBITDA we wouldn't use the after-tax interest expense? I'm looking at a previous version of a page someone put together that is calculating LFCF from EBITDA based off of some research reports, and the interest expense used in the LFCF calculation is the pre-tax amount (from the line between EBIT and EBT). Am I missing something or is this wrong?
Thanks a ton!
From what I know, you will usually charge the full tax expense in one line, then deduct the tax shield in another. If there is a breakdown between un-levered and levered then the tax shield will probably be under the levered cash-flows while tax will be charged under un-levered, which means you are essentially charging after-tax interest.
Hope this helps.
Voluptatem et omnis quo. Optio quibusdam ab ut. Accusantium et ipsam reprehenderit qui voluptas laboriosam minus laborum.
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...