How To Calculate Levered Cash Flow in SAP | Arithmix

Calculating levered cash flow is an important task for any business owner or investor. Levered cash flow is the amount of cash generated by a company after taking into account its debt obligations. This is an important metric to consider when evaluating the financial health of a company, as it provides insight into its ability to meet its debt obligations and generate profits.

What Is Levered Cash Flow?

Levered cash flow is the amount of cash generated by a company after taking into account its debt obligations. This is different from unlevered cash flow, which does not take into account any debt obligations. Levered cash flow is important because it provides insight into a company's ability to meet its debt obligations and generate profits.

To calculate levered cash flow, you need to start with the company's earnings before interest and taxes (EBIT). This is the company's revenue minus its operating expenses. Next, you need to subtract the interest expense and taxes from the EBIT. The resulting number is the levered cash flow.

For example, if a company has an EBIT of $1 million, an interest expense of $200,000, and a tax expense of $300,000, the levered cash flow would be $500,000 ($1 million - $200,000 - $300,000).

When Is It Valuable To Calculate Levered Cash Flow?

Calculating levered cash flow is valuable in a number of situations. For example, if you are considering investing in a company, you want to know if it has the ability to meet its debt obligations and generate profits. Levered cash flow provides insight into this.

Levered cash flow is also important when evaluating the financial health of a company. If a company has a high level of debt and is not generating enough cash flow to meet its debt obligations, it may be at risk of defaulting on its loans. Calculating levered cash flow can help you identify this risk.

Overall, calculating levered cash flow is an important task for any business owner or investor. It provides insight into a company's ability to meet its debt obligations and generate profits, and can help you make informed decisions about investing or doing business with a company.

How Do You Calculate Levered Cash Flow in SAP

SAP itself isn’t naturally geared towards letting you calculate complex metrics like Levered Cash Flow. As an alternative, teams typically use products like Arithmix to import data from SAP and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like SAP, combine it with data from other systems, and create calculations like Levered Cash Flow.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Levered Cash Flow in Arithmix

Calculating metrics like Levered Cash Flow is simple in Arithmix. Once you've created your free account, you’ll be able to import your SAP data, and use it to create natural language formulas for metrics like Levered Cash Flow.

Arithmix is designed to give you the power to build any calculations you want on top of your SAP data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.