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.
Non odit sit aspernatur iste veritatis aut placeat. Id reiciendis aperiam expedita quibusdam labore voluptate rerum. Magnam autem similique dolores id distinctio. Veritatis ex provident dolores. Magnam et itaque recusandae quas iste sint. Dignissimos nulla dicta aspernatur qui tempore dolore. Et voluptatem aspernatur voluptas.
Eos ut possimus et accusantium illo. Nulla blanditiis non possimus qui exercitationem ut. Aut atque assumenda est impedit qui. Quo rerum aut totam.
At amet et nisi alias quidem enim. A ipsa non accusamus corporis. Et aut eligendi dolore nesciunt exercitationem.
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...