What is Unlevered Free Cash Flow and how to calculate it?

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calculating unlevered free cash flow can be calculated by looking at the financial statements of a company, i.e. income statement and cash flow statement. Take EBIT (earnings before interest and taxes) and multiply it by (1 - tax rate) after which you add depreciation and amortization as they are not cash expenses. Then, deduct capital expenditures (CapEx) and working capital changes. This process provides you the cash the business makes prior to financing expenses. Proper calculation of unlevered free cash flow assists investors to determine the level of operations and sustainability of a company.