medium · Investment Banking

A company has a Stock-Based Compensation (SBC) expense of $10.0 million.

How does this affect the calculation of Unlevered Free Cash Flow (UFCF)?

  1. It is added back to Net Income as a non-cash charge
  2. It is treated only as a financing activity on the statement
  3. It has no cash impact at all on UFCF whatsoever
  4. It is subtracted twice as a recurring cash operating expense

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