what lfcf can tell you
levered free cash flow is a measure of a company s ability to expand its business and to pay returns to shareholders dividends or buybacks via the money generated through operations it may also be used as an indicator of a company s ability to obtain additional capital through financing if a company already has a significant amount of debt and has little in the way of a cash cushion after meeting its obligations it may be difficult for the company to obtain additional financing from a lender if however a company has a healthy amount of levered free cash flow it then becomes a more attractive investment and a low risk borrower even if a company s levered free cash flow is negative it does not necessarily indicate that the company is failing it may be the case that the company has made substantial capital investments that have yet to start paying off as long as the company is able to secure the necessary cash to survive until its cash flow increases a temporary period of negative levered free cash flow is both survivable and acceptable 