Levered Free Cash Flow (LFCF)

Levered free cash flow (LFCF) is a measure of a company's ability to generate cash flow after taking into account its capital structure. It is calculated by taking a company's net income, adding back interest expense, and subtracting taxes, depreciation, and amortization. LFCF is often used as a proxy for cash flow from operations because it provides a more accurate picture of a company's ability to generate cash flow in the future.

There are a few reasons why LFCF is a more accurate measure of cash flow from operations than net income. First, interest expense is a non-cash expense, so it does not represent a true cash outflow. Second, taxes are not a true cash outflow either, because they are paid in the future. Third, depreciation and amortization are non-cash expenses that are used to account for the wear and tear on a company's assets.

LFCF is a useful metric for investors because it provides a more accurate picture of a company's ability to generate cash flow in the future. This information can be used to assess a company's financial health and its ability to pay dividends and make acquisitions.

In addition to being used by investors, LFCF is also used by analysts to compare companies with different capital structures. This is because LFCF is not affected by a company's capital structure, so it can be used to compare companies that have different levels of debt.

LFCF is a valuable metric for investors and analysts alike. It provides a more accurate picture of a company's ability to generate cash flow in the future, and it can be used to compare companies with different capital structures.