is FCFF just another word for unlevered fcf? and is FCFE just another word for levered fcf? thank you
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Yes. http://www.investopedia.com/terms/f/freecashflowfirm.asp http://www.investopedia.com/terms/f/freecashflowtoequity.asp
Hm, they're similar but i wouldn't say they're the same in the strict sense. When you do a dcf on an unlevered basis, you should remove all effects from leverage in your fcf, and that includes the interest deductions in your tax calculations (ie use unlevered cash tax in your unlevered fcf). Whereas fcff is the free cash flow available to credit holders (debt&equity), and incorporate the interest deductions for tax purposes
no it doesn't incorporate interest deductions, FCFF is the same as UL fcf
I've never seen FCFF where your tax doesn't include interest deductions, maybe it's specific to your sector group? Our bid, vendor or any other client valuation models model fcff on that basis, its only when we are doing a quick and dirty pitch valuation model that sometimes we use UL fcf (and so no interest deductions for tax purposes)
And so, out of curiosity, when you move down from fcff to fcfe, do you incorporate the differential in tax paid if you've been using the unlevered cash tax in the calculation of the fcff?
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