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Unlevered Free Cash Flow

Trading Term

Unlevered free cash flow estimates cash generated by operations before interest payments and other financing effects. It typically incorporates after-tax operating profit, noncash expenses, capital expenditures, and changes in working capital.

The measure is commonly used in enterprise valuation because it represents cash available to all capital providers. It is generally discounted using a rate reflecting the overall risk and financing structure of the business.

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