What is Levered Free Cash Flow?
Conceptually, Levered Free Cash Flow (LFCF) is the cash flow generated in a period that is free to be given to shareholders.
It’s the amount of cash flow leftover after paying for all expenses (including interest) and investing activities. All the mandatory and necessary cash payments to keep the business running have been paid for. All expenses and relevant investing-related cash outflows have been deducted. LFCF is what’s left that the company can use to fund financing activities. It can use the cash to pay shareholders dividends, repurchase shares, repay debt outstanding, or keep it in the bank.