IRR vs UFCF. whats the difference!
can someone explain to me the difference between IRR vs UFCF vs LFCF?
Thanks very much!
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What, between a rate of return and cashflow? Investopedia will serve you well.
Unlevered Free Cash Flow (UFCF) = EBITDA - Capital expenditure (CAPEX) - Working Capital It is the company's cash flow before interest payments are taken into account.
Levered Free Cash Flow (LFCF) is the amount of cash available to stockholders after interest payments on debt are made.
IRR (internal rate of return) is the discount rate to have of the future cash flows such that the net present value (NPV) is 0. So based on IRR alone, a project with a higher IRR would be more ideal project. However if the projects are mutually exclusive, using NPV would be a more accurate method of calculating.
In summary, IRR is a discount rate e.g 10%. On the other hand, UFCF is cash flow before interest payments while LFCF is the cash flow after interest payments on its debt (levered = using debt).
Hope this helps.
woozy - Thanks for the help! sorry but i should of specified my confusion.. what is the difference between irr and lfcf yield?
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