Levered Free Cash Flow (ttm): -888.10M
What is the definition of levered free cash flow and why is it negative?? Free cash flow is positive. What's the difference? Now don't dress me down for asking such an amateurish question-okay? This board is getting pretty tough these days!
This is not an amatuerish question. Last time I visited this question - took me a while what it was really telling me - when I was buying REITS. My summatuon back then was it was not worth a lot - because it penalizes the companies that are buying new assets. The ones that are not expanding look better. This might have more value in a non- capital intensive industry.
The amount of cash available to stockholders after interest payments on debt are made. A company with a large amount of debt will have to spend more money on interest payments, which in turn will limit the amount of money that can be sent to stockholders in the form of dividends.
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That's simplified definition.
Levered Free Cash Flow
Formula: (EBIT + Interest Expense) * (1 – Tax Rate) + Depreciation & Amort., Total + Other Amortization + Capital Expenditure + Sale (Purchase) of Intangible assets - Change in Net Working Capital + Pref. Dividends Paid + Total Debt Repaid + Total Debt Issued + Repurchase of Preferred + Issuance of Preferred Stock
Where: Tax Rate = 0.375
This figure is a normalized item that excludes non-recurring items and also takes into consideration cash inflows from financing activities such as debt or preferred stock issuances.
Aye - I'd like to see the computation itself to understand it better.
For reference - other lessors have similar numbers. Here is the sector:
AER: -$1,510m (As a ratio of market cap: 2.5)
AYR: -$888m (As a ratio of market cap: 1.5)
FLY: N/A (??)
GLS: -$68m (As a ratio of market cap: 0.3)
So I'd like to understand it a little more, but AER is market-capped higher than AYR with a number 80% higher. Add to this, S&P ranked AER as 4 stars, and AYR as 3. The numbers we have are all negative - so is it an unfair measure of this type of business model? Or are all of them in trouble? I doubt the latter, but I do need to be a little more educated about this number.