How this calculator works
Apply the tax rate to EBIT, add back depreciation and amortization, then subtract capital expenditures and the increase in non-cash operating working capital. Use a negative change for a working-capital release. The tax rate is entered by you, not looked up from a jurisdiction. Applying tax to negative EBIT assumes the resulting tax benefit is usable.
Formula
UFCF = EBIT * (1 - tax rate) + depreciation and amortization - capital expenditures - change in operating working capital. NOPAT = EBIT * (1 - tax rate).
Worked example
EBIT of $300,000 at 25% tax gives $225,000 after tax. Adding $80,000 of depreciation and subtracting $100,000 of capital spending and $30,000 of working-capital investment leaves $175,000.
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Frequently asked questions
Is this the same concept as FCFF?
Yes. This page focuses on the operating-profit bridge and can recover any missing component. The FCFF page also starts from net income, EBITDA or operating cash flow.
Why exclude interest and borrowing?
Unlevered cash flow measures operations before financing choices. Interest, debt issues and repayments belong in financing analysis.
When does a reverse mode fail?
EBIT cannot be recovered at a 100% tax rate, and tax cannot be recovered from zero EBIT. Those cases do not have a unique answer.