How To Calculate Levered Cash Flow in Wave Accounting | Arithmix

Levered cash flow is a financial metric that is used to determine the amount of cash flow that is available to a company's investors after accounting for the company's debt obligations. It is an important metric for investors who are interested in understanding a company's financial health and its ability to pay back its debts.

To calculate levered cash flow, you will need to start with the company's net income. This is the total amount of money that the company has earned after accounting for all of its expenses. Next, you will need to add back any non-cash expenses, such as depreciation and amortization. These expenses do not involve any cash outflows, so they need to be added back to the net income.

Once you have calculated the company's earnings before interest and taxes (EBIT), you will need to subtract the interest expense. This is the amount of money that the company has paid in interest on its debts. The resulting number is the company's earnings before taxes (EBT).

To calculate the levered cash flow, you will need to subtract the taxes from the EBT. This will give you the company's after-tax earnings. Finally, you will need to add back any non-cash expenses that were subtracted earlier, such as depreciation and amortization. The resulting number is the company's levered cash flow.

What Is Levered Cash Flow?

Levered cash flow is a measure of a company's ability to generate cash flow after accounting for its debt obligations. It takes into account the company's net income, interest expense, and taxes, as well as any non-cash expenses. By calculating levered cash flow, investors can get a better understanding of a company's financial health and its ability to pay back its debts.

Levered cash flow is an important metric for investors who are interested in evaluating a company's financial health. It can be used to compare different companies in the same industry, as well as to evaluate a company's performance over time. By tracking a company's levered cash flow over time, investors can get a better understanding of how the company is performing and whether it is generating enough cash flow to meet its debt obligations.

When Is It Valuable To Calculate Levered Cash Flow?

Calculating levered cash flow is valuable in a number of different situations. For example, if you are considering investing in a company, you may want to calculate its levered cash flow to get a better understanding of its financial health and its ability to pay back its debts.

Levered cash flow can also be useful for companies that are considering taking on additional debt. By calculating their levered cash flow, companies can get a better understanding of how much debt they can afford to take on without putting their financial health at risk.

Finally, levered cash flow can be useful for companies that are looking to improve their financial performance. By tracking their levered cash flow over time, companies can identify areas where they can reduce expenses or increase revenue in order to generate more cash flow and improve their financial health.

How Do You Calculate Levered Cash Flow in Wave Accounting

Wave Accounting 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 Wave Accounting 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 Wave Accounting, 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 Wave Accounting 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 Wave Accounting 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.