How to Calculate Levered Free Cash Flow

A successful company can show its shareholders that there is still cash available after all of the debts are paid. The levered free cash flow calculation determines exactly how much money the company has left after paying debtors. This is important to see if the company is operating in the black and if there will be large dividends to shareholders. Before you can calculate the levered free cash flow, you must find the operating cash flow and the capitol expenditures.

Calculate the operating cash flow. The operating cash flow shows if a company has problems with sufficient cash resources and inventory turnover.

Add your earnings before interest and taxes to the amount of depreciation of inventory. Subtract the amount of business' income taxes from that amount to get your operating cash flow.


Calculate the capitol expenditures. Capitol expenditures is the money the company spent on the physical assets of company. Subtract the company's total liabilities from the total assets to find the capitol expenditures.


Subtract the capitol expenditures from the operating cash flow. This amount is your total leveled free cash flow.