Unlevered Free Cash Flow Calculator
Estimate cash flow available to both debt and equity capital providers before financing costs.
Operating assumptions
Earnings before interest and taxes.
Marginal or normalized operating tax rate.
Non-cash expense added back after tax.
Cash invested in long-lived operating assets.
Positive means working capital used cash; negative releases cash.
Live results
Unlevered free cash flow
$600,000.00
Cash flow bridge
| Bridge item | Cash-flow effect | Running total |
|---|---|---|
| NOPAT | $750,000.00 | $750,000.00 |
| Add: Depreciation & amortization | $150,000.00 | $900,000.00 |
| Less: Capital expenditures | – $220,000.00 | $680,000.00 |
| Less: Change in net working capital | – $80,000.00 | $600,000.00 |
| Unlevered free cash flow | $600,000.00 | $600,000.00 |
How to use the unlevered free cash flow calculator
What this calculator does
This calculator estimates unlevered free cash flow (UFCF), also called free cash flow to the firm in many valuation models. It starts with operating profit before interest, applies an operating tax charge, adds back non-cash depreciation and amortization, and subtracts capital expenditures and the change in net working capital. The result is a capital-structure-neutral cash flow available to both lenders and equity investors. It is useful for a discounted cash flow model, operating performance review, acquisition analysis, or a forecast bridge. It does not determine enterprise value by itself, select a discount rate, predict future growth, or replace a complete financial model.
When to use it
Use the calculator when you need to compare companies with different debt structures, convert an operating forecast into a DCF-ready cash flow, test how reinvestment assumptions affect cash generation, or reconcile EBIT to cash flow before financing. The standard relationship is consistent with the CFA Institute's free cash flow valuation framework.
How to calculate
- The calculator opens with a complete demonstration: $1,000,000 EBIT, a 25% tax rate, $150,000 of depreciation and amortization, $220,000 of capital expenditures, and an $80,000 increase in net working capital. Results and a validated example workbook are available immediately.
- Replace each demonstration value with figures from the same reporting or forecast period. Dollar fields accept plain U.S.-style numbers with optional commas; the tax field accepts a percentage from 0 to 100. Live results update after every valid edit.
- Read the primary UFCF result, then review NOPAT, cash taxes, net reinvestment, cash conversion, and the cash flow bridge to see what drives the total.
- Select Download Excel to export the current typed inputs and results to a real .xlsx workbook. Reset clears the demonstration values and calculated content; Download Excel then remains unavailable until all required fields are complete and valid again.
Input guide
EBIT is required operating income before interest and taxes, entered in dollars. A realistic example is 1,000,000. Higher EBIT normally raises NOPAT and UFCF, all else equal. Do not enter EBITDA or net income here. Tax rate is a required percentage from 0% through 100%; 25% is the demonstration value. A higher rate reduces NOPAT and UFCF when EBIT is positive. Enter 25 for 25%, not 0.25.
Depreciation & amortization is a required nonnegative dollar amount; the example is 150,000. It is added back because it reduced EBIT without being a current-period cash outflow. Do not add it twice if EBIT was already adjusted. Capital expenditures is a required nonnegative dollar amount; the example is 220,000. More CapEx reduces current UFCF, even when the spending may support future growth. Use actual or forecast cash investment in long-lived operating assets.
Change in net working capital is required and may be positive, zero, or negative. The example is an 80,000 increase, which uses cash and reduces UFCF. A negative value represents a release of working capital and increases UFCF. Use the period-to-period change in operating working capital, not the ending balance itself, and keep the sign convention consistent.
Output guide
Unlevered free cash flow is the primary dollar estimate. Positive UFCF indicates operating cash remains after taxes and reinvestment; negative UFCF can reflect weak operating profit, heavy investment, or working-capital absorption. NOPAT is EBIT after the normalized operating tax charge. Cash taxes shows EBIT multiplied by the tax rate. Net reinvestment equals capital expenditures plus the working-capital change minus depreciation and amortization; a high value means more cash is being committed to operations.
Cash conversion is UFCF divided by NOPAT when NOPAT is nonzero. It is an analytical ratio, not a recommendation; values above 100% can occur when working capital is released or depreciation exceeds current investment. The Cash flow bridge lists each adjustment, its cash-flow effect, and the running total. The summary pills repeat NOPAT, reinvestment, and UFCF margin, where UFCF margin is UFCF divided by EBIT when EBIT is nonzero.
Worked example
With EBIT of $1,000,000 and a 25% tax rate, cash taxes equal $250,000 and NOPAT equals $750,000. Add back $150,000 of depreciation and amortization, subtract $220,000 of capital expenditures, and subtract the $80,000 working-capital increase. The calculation is $750,000 + $150,000 – $220,000 – $80,000 = $600,000. Net reinvestment is $150,000 and cash conversion is 80.00%. These figures match the first-open controls, bridge table, live results, and downloadable workbook.
How the formula works
The core formula is UFCF = EBIT × (1 – tax rate) + depreciation and amortization – capital expenditures – change in net working capital. EBIT after tax is commonly called NOPAT. Because interest expense is excluded, UFCF is normally paired with a weighted average cost of capital when used in an enterprise-value DCF. The FCFF formula explanation from Wall Street Prep illustrates the same NOPAT-plus-noncash-charges-minus-reinvestment bridge.
UFCF is a non-GAAP analytical measure, so definitions can vary at the edges. A detailed model may adjust for deferred taxes, stock-based compensation, restructuring items, operating leases, or acquisitions. Keep the definition consistent across periods and companies. For a broad accounting perspective on free cash flow and its alternative formulations, see the Investopedia overview of unlevered free cash flow.
Interpretation and common mistakes
A high positive UFCF may indicate strong operating profitability and disciplined reinvestment, but it should not be judged in isolation. Low CapEx can temporarily lift cash flow while underinvestment weakens future capacity. A working-capital release can also boost one period without being repeatable. Conversely, negative UFCF can be reasonable during a growth phase if new assets and working capital produce attractive future returns.
Common errors include using EBITDA instead of EBIT without changing the formula, applying taxes after adding back depreciation, reversing the working-capital sign, mixing annual EBIT with quarterly reinvestment figures, and subtracting debt service. Debt interest and principal belong outside an unlevered cash-flow calculation. When UFCF is used in valuation, ensure the forecast period, terminal value, and discount rate are internally consistent with the same nominal or real basis.