How to calculate free cash flow?
Free cash flow represents cash generated by the company through the income statement, but also needs to factor in changes in net working capital, capital expenditures, and other cash flow items.
Unlevered free cash flow represents cash the company generates or losses prior to factoring in interest on debt, as well as state and federal income taxes. Free cash flow is a key metric as it helps a company understand if they can pay their debt on a monthly/quarterly/annual basis.
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