About this lesson
Free cash flow: from EBITDA to unlevered free cash flow in Google Sheets
In Google Sheets, unlevered free cash flow = EBITDA − tax on EBIT − capex − increase in working capital: =B2-B9-B4-B5, where tax on EBIT is =B8*$B$6 and EBIT is EBITDA less depreciation. Tax is worked out on EBIT, not on profit after interest, because unlevered cash flow ignores how the business is funded.
Using Excel? Do this lesson in Excel.
=B2-B3What you'll practise
Turn an acquisition target's EBITDA forecast into unlevered free cash flow: EBIT, tax on EBIT, then capex and working capital, and how much of EBITDA ends up as cash.
4 steps · 40 points · the cells outlined in gold below
- free cash flow
- unlevered FCF
- tax on EBIT
- capex
- cash conversion
The data
| A | B | C | D | E | F | |
|---|---|---|---|---|---|---|
| 1 | ($m) | FY26 | FY27 | FY28 | FY29 | FY30 |
| 2 | EBITDA | 48.2 | 53.6 | 58.9 | 63.1 | 66.8 |
| 3 | Depreciation | 12.4 | 13.1 | 13.9 | 14.6 | 15.2 |
| 4 | Capex | 15.8 | 16.4 | 17.2 | 17.9 | 18.3 |
| 5 | Increase in working capital | 2.6 | 2.9 | 2.7 | 2.3 | 2.0 |
| 6 | Tax rate | 30% | ||||
| 7 | ||||||
| 8 | EBIT | |||||
| 9 | Tax on EBIT | |||||
| 10 | Unlevered free cash flow | |||||
| 11 | Cash conversion |