Free Cash Flow to Firm (FCFF) Calculator — Unlevered FCF
FCFF is the cash flow available to all of a company's capital providers — both debt holders and equity holders — before any financing payments. It is the unlevered (debt-free) cash flow used in enterprise-value DCF models discounted at the Weighted Average Cost of Capital (WACC).
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Unlevered free cash flow available to all capital providers — discounted at WACC to get enterprise value
- 1
NOPAT (EBIT after tax)
500,000 × (1 − 25% ÷ 100) = 375,000Net operating profit as if the firm were entirely equity-financed. - 2
Add depreciation & amortisation
375,000 + 80,000 = 455,000 - 3
Subtract capital expenditures
455,000 − 120,000 = 335,000 - 4
Subtract increase in working capital → FCFF
335,000 − 20,000 = 315,000
How does this calculator work?
FCFF = EBIT × (1 − t) + D&A − CapEx − ΔWC. It is the unlevered, pre-financing cash flow belonging to all capital providers. Discount FCFF at the WACC to get enterprise value; subtract net debt to arrive at equity value. It is the standard cash flow input for enterprise-value DCF models in investment banking.
Formula
How this is calculated
The formula starts with EBIT (earnings before interest and taxes) because FCFF must be independent of how the firm is financed — interest paid to debt holders is excluded. Multiplying EBIT by (1 − tax rate) gives NOPAT, the net operating profit as if the firm had no debt tax shield. Non-cash depreciation and amortisation are then added back because they reduce EBIT but involve no cash outflow. Capital expenditures are subtracted as real cash payments for assets. Finally, an increase in net working capital (current assets minus current liabilities) consumes cash, so it is subtracted; a decrease releases cash.
FCFF differs from FCFE in that it includes cash that is owed to debt holders. Discounting FCFF at the WACC yields enterprise value (EV); subtracting net debt and other claims from EV gives equity value. This two-step approach — computing EV then deducting debt — is the most common DCF structure in investment banking and equity research.
A practical limitation: FCFF is highly sensitive to the assumed tax rate. Some analysts use the statutory rate, others the effective rate. Using EBIT also ignores minority interests; where these are material, a more detailed starting point is EBIT adjusted for minorities. Always check which definition a model uses before comparing FCFF across firms.
Frequently asked questions
FCFF is the pre-financing cash flow available to ALL capital providers. Including interest would make it depend on capital structure (how much debt the firm carries), defeating the purpose of comparing firms on an unlevered basis. WACC handles the cost of debt separately in the discount rate.
Enterprise value = Σ (FCFFₜ / (1 + WACC)ᵗ) summed over the forecast horizon plus a terminal value, discounted at WACC. Subtracting net debt (debt minus cash) and adding back cash and equivalents gives equity value from the DCF.
NOPAT stands for Net Operating Profit After Tax — it is EBIT × (1 − t). It represents the profit from operations as if the firm were entirely equity-financed, removing the tax shield of interest and providing a clean measure of operating efficiency.
Also known as
TG we-Calculate Editorial Team. (2026). Free Cash Flow to Firm (FCFF) Calculator — Unlevered FCF [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/free-cash-flow-to-firm-calculator
TG we-Calculate Editorial Team. "Free Cash Flow to Firm (FCFF) Calculator — Unlevered FCF." TG we-Calculate. 2026. https://we-calculate.com/calculator/free-cash-flow-to-firm-calculator.
TG we-Calculate Editorial Team, "Free Cash Flow to Firm (FCFF) Calculator — Unlevered FCF," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/free-cash-flow-to-firm-calculator
@misc{wecalculate_free_cash_flow_to_firm_calculator, title = {Free Cash Flow to Firm (FCFF) Calculator — Unlevered FCF}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/free-cash-flow-to-firm-calculator}}, year = {2026}, note = {TG we-Calculate} }
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