Series 79 practice questioneasyDCF Analysis
Which of the following is most likely to increase unlevered free cash flow in a DCF?
- AIncrease in capital expenditures
- BDecrease in net working capital✓ Correct answer
- CIncrease in interest expense
- DIncrease in taxes paid
Explanation
Why B — Decrease in net working capital
A decrease in net working capital releases cash, increasing unlevered free cash flow. The other options would reduce free cash flow or are not relevant to the unlevered calculation.
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