Unlevered Free Cash Flow Calculator - NOPAT, D&A, and CapEx

An unlevered free cash flow calculator turns operating profit, taxes, depreciation, capital spending, and working-capital changes into the cash a business generates before any debt-service decisions.

• • DCF valuation: Build the FCFF series that you discount at WACC.
• • Capital-structure review: Compare UFCF against debt service before adding or refinancing debt.
• • M&A and LBO work: Translate an acquiree's EBIT into the unlevered cash a new owner can expect.
• • Earnings-quality check: Compare UFCF with reported EBIT to see how much operating profit turns into cash.

UFCF is unlevered because the calculation does not start from net income and does not subtract interest, so the result is independent of how the company is financed. The same UFCF can be discounted at WACC.

The bottom-up walk starts from EBIT, removes tax, adds back D&A, subtracts CapEx, and adjusts for working-capital changes. The calculator uses the bottom-up walk because the inputs map to the income statement.

When the UFCF series is ready, the DCF Calculator is the next step in the same valuation chain.

The calculator applies a bottom-up formula: tax-adjusted operating profit, plus the non-cash D&A add-back, minus capital spending, minus any cash tied up in working-capital growth. The result is the cash the business generates before debt-service decisions.

• EBIT: Operating income before interest and taxes, the starting point for the unlevered cash series.
• Tax rate: Effective tax rate applied to EBIT. Match it to the jurisdiction and period.
• D&A: Depreciation and amortization, entered as a positive add-back.
• Capital expenditures: Purchases of long-lived operating assets, entered as a positive spending amount.
• Change in net working capital: Increase in operating working capital. Positive for a build, negative for a release.

NOPAT is computed first because analysts want a single after-tax operating number. D&A is added back because it reduced EBIT without consuming cash. CapEx is subtracted because it consumed cash.

The same formula can be written starting from EBITDA. The two forms are equivalent once D&A is added back on the EBITDA path.

According to Aswath Damodaran, NYU Stern, free cash flow to the firm is the cash flow left over after operating expenses, taxes, and reinvestment needs, but before any debt payments (interest or principal payments).

When the EBIT input is not given directly, the EBIT Calculator can derive it from revenue, cost of goods sold, and operating expenses.

Five concepts drive the result.

If you only have time to memorize one thing, memorize the sign convention: subtract CapEx and a working-capital build, add back D&A and a working-capital release.

The sign of EBIT, the tax rate, and NOPAT follow the income statement; the sign of CapEx and the working-capital change follow the cash flow statement.

Once the UFCF series is built, the WACC Calculator supplies the discount rate that converts the cash flow stream into an enterprise value.

Use one period at a time and keep all financial inputs in the same unit.

1. 1 Pull EBIT from the income statement: Use operating income for the period. If you only have net income, walk back through interest and taxes.
2. 2 Set the tax rate for the same period: Use 21% for the US federal rate, the company's effective tax rate, or a forward-looking assumption.
3. 3 Add D&A from the cash flow statement: Take D&A from the operating section of the cash flow statement.
4. 4 Enter capital expenditures as a positive spending amount: Use purchases of property, plant, equipment, and similar long-lived assets.
5. 5 Add the change in net working capital: Positive for a build, negative for a release.
6. 6 Add revenue for the margin output: Revenue is only used for the UFCF margin and UFCF-to-EBIT comparisons.

Using the unlevered free cash flow calculator with EBIT of $4,000,000, tax rate of 22%, D&A of $1,800,000, CapEx of $2,500,000, working-capital increase of $250,000, and revenue of $20,000,000, the result is NOPAT of $3,120,000, UFCF of $2,670,000, a UFCF margin of 13.35%, and UFCF equal to 66.75% of EBIT.

To compare UFCF with the cash left after operating capital spending, run the same period through the Free Cash Flow Calculator.

Outputs turn one formula into valuation and capital checks.

• • Produces a DCF-ready cash series: UFCF (FCFF) is the cash flow discounted at WACC inside a DCF.
• • Isolates operating performance from financing: Removing interest keeps the result independent of debt.
• • Surfaces two practical ratios: UFCF margin (against revenue) and UFCF as a share of EBIT show cash conversion in different denominators.
• • Connects to leverage and credit work: Compare UFCF against interest expense and principal to size debt capacity.
• • Highlights working-capital timing: The working-capital input makes a temporary build or release visible.

The biggest practical win is that UFCF does not depend on the financing decision, so the same number supports a public-company valuation, a private-company M&A model, and a lender's debt-capacity review.

For a private-business owner, UFCF is also the cash a strategic or financial buyer can underwrite, so the calculation is a useful starting point for an M&A conversation, not just a public-company valuation. The same logic applies to internal capital-allocation reviews: UFCF is the cash available before any decision about dividends, buybacks, or new debt.

To turn the UFCF stream into an enterprise-value range, pair the discount rate from the Enterprise Value Calculator with a terminal-growth assumption.

UFCF moves with the tax assumption and capital cycle, so review these factors before use.

• • UFCF does not subtract mandatory principal, dividends, or lease payments; compute levered free cash flow separately.
• • The formula uses a single-period effective tax rate, so deferred-tax effects are simplified.
• • UFCF is a single-period number; for a valuation, build a multi-year forecast before plugging it into a DCF.

The most common misuses are using a generic tax rate that does not match the period being valued, and treating a single year's UFCF as a steady-state cash flow.

According to US Securities and Exchange Commission (Investor.gov), the cash flow statement separates operating, investing, and financing activities, which is why capital expenditures appear in the investing section and the tax-adjusted operating profit is used to build an unlevered cash measure.

When UFCF is the right cash measure to value the business, the ROIC Calculator shows how that cash compares with the capital invested in it.