Categories: Cash

Unlevered vs Levered Free Cash Flow: Exploring Differences

Unlevered free cash flow and levered free cash flow are two important concepts in financial modeling. Unlevered free cash flow (UFCF) refers to the cash flow of a company without considering any debt or other liability related financing. This is important because it allows for a true assessment of the cash flows being generated from operations. On the other hand, levered free cash flow (LFCF) considers the impact of financing decisions (debt and/or equity). It is important because it allows analysts to better understand the true cost of capital for a business, as well as assess how leverage is affecting the value of the company. Both are useful tools when making investment decisions and/or business decisions.

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