Module VI· DCF Model BuildIntermediate
Question
How do you construct UFCF from EBIT in Excel?
Answer
Start with EBIT, tax-effect it to get NOPAT, add back D&A, subtract capex, and subtract increase in net working capital. Formula: UFCF = EBIT x (1 - tax rate) + D&A - capex - change in NWC. Use unlevered free cash flow before interest because DCF enterprise value is capital-structure neutral.