LEVERED FREE CASH FLOW

The amount of cash left over for the company’s stockholders after interest payments on debt have been paid out. A firm, who has a large amount of debt, needs to spend more money on paying interests. In return, it will cap the money that can be given to stockholders, in the form of dividends. The amount is less if the firm has a larger amount of debt. This plays an essential role because the cash can be used to pay dividends or for expansion, or take more debt for growth opportunities.