Which analysis would you use to evaluate how much cash flow a company generates for its equity investors?

Levered Free Cash Flow analysis is the most appropriate choice when evaluating how much cash flow a company generates specifically for its equity investors. This metric takes into account the cash that remains after a company has met its financial obligations, including interest payments on debt. By focusing on the cash flow available to equity holders, it reflects the reality of what shareholders can expect in terms of returns, dividends, or reinvestment opportunities.

Levered Free Cash Flow is calculated by adjusting Free Cash Flow for the effects of debt repayments and interest expenses. It gives a clear picture of the amount of cash generated by the company that is available to equity shareholders after meeting all obligations. This makes it particularly valuable for assessing the overall financial health of a company from the perspective of its equity investors.

In contrast, EBIT analysis and Operating Income analysis primarily focus on the operating performance of a company without factoring in the effects of financing decisions, such as interest expenses. While Free Cash Flow to Firm indicates the cash available to all providers of capital (both equity and debt), it does not isolate the amount specifically available to equity holders as Levered Free Cash Flow does, making it less suitable for this specific evaluation.