Levered Free Cash Flow Calculator — LFCF Formula
Levered Free Cash Flow (LFCF) is the cash a business generates that is available to its equity holders after meeting all operating costs, investment needs, working capital changes, and debt obligations. Enter net income, D&A, CapEx, change in net working capital and net debt repayment to compute LFCF and its margin.
Cash available to equity holders after all obligations
Surplus
320,000Net income + D&A
67.4%
CapEx + ΔNWC + Debt
32.6%
- 1
Cash inflows (NI + D&A)
500,000 + 120,000 = 620,000 - 2
Cash outflows (CapEx + ΔNWC + debt)
180,000 + 40,000 + 80,000 = 300,000 - 3
Levered Free Cash Flow
620,000 − 300,000 = 320,000Cash available to equity holders after all obligations.
How does this calculator work?
LFCF = Net Income + D&A − CapEx − ΔNWC − Net Debt Repayment. It measures cash available to equity holders after all obligations. Add back non-cash D&A, subtract real cash outflows (investment, working capital, debt service). A positive figure means the business is self-funding equity owners.
Formula
How this is calculated
Levered Free Cash Flow starts with net income — profit after interest and taxes — and adjusts it to a pure cash basis. Depreciation and amortisation (D&A) are non-cash charges deducted in the income statement but not actually paid out, so they are added back. Capital expenditure (CapEx) is the real cash spent on maintaining or expanding fixed assets — subtracted because it is a genuine outflow not reflected in net income. A rise in net working capital (ΔNWC) ties up cash (more inventory, more receivables, less payables), so an increase is also subtracted. Finally, net debt repayment reduces the cash available to equity owners after debt service.
The result — LFCF — is sometimes called Free Cash Flow to Equity (FCFE) and is the figure most relevant to shareholders. It is the theoretical maximum cash available for dividends, buybacks, or growth reinvestment. A consistently positive LFCF signals a self-funding business; negative LFCF means the company is consuming cash and may need external financing.
LFCF margin (LFCF ÷ revenue) benchmarks cash-generation efficiency against peers. Note that one-time items in net income or unusual CapEx can distort a single period's reading — analysts typically smooth LFCF over two or three years before drawing conclusions.
Frequently asked questions
Levered (LFCF) is after debt obligations — it belongs to equity holders. Unlevered FCF (UFCF) is before interest and debt repayment — it belongs to all capital providers. UFCF is used in enterprise-value DCFs; LFCF is used in equity-value DCFs.
Depreciation is a non-cash accounting charge that reduces reported income but does not involve an actual cash payment. Adding it back converts net income from an accounting number to a closer approximation of cash earnings.
Negative LFCF is not automatically alarming — fast-growing companies often invest heavily in CapEx and working capital. The key question is whether the investment is generating future cash flows that exceed its cost. Persistent negative LFCF without a growth narrative may signal a structural cash problem.
Also known as
TG we-Calculate Editorial Team. (2026). Levered Free Cash Flow Calculator — LFCF Formula [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/levered-free-cash-flow-calculator
TG we-Calculate Editorial Team. "Levered Free Cash Flow Calculator — LFCF Formula." TG we-Calculate. 2026. https://we-calculate.com/calculator/levered-free-cash-flow-calculator.
TG we-Calculate Editorial Team, "Levered Free Cash Flow Calculator — LFCF Formula," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/levered-free-cash-flow-calculator
@misc{wecalculate_levered_free_cash_flow_calculator, title = {Levered Free Cash Flow Calculator — LFCF Formula}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/levered-free-cash-flow-calculator}}, year = {2026}, note = {TG we-Calculate} }
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