Unlevered Beta calculation

The Unlevered Beta is the Beta of a company after subtracting the impact of its debt obligations. Unlevered Beta removes the effects of the use of leverage on the capital structure of a firm, since the use of debt can result in tax rate adjustments that benefit a company. Removing the debt component allows an investor to compare the base level of risk between various companies. This number provides a measure of how much systematic risk a firm's equity has when compared to the market.

Calculation rules

It is calculated by dividing the standard Beta (Levered Beta) by [1 + (1 - corporate tax rate) x (ND / E)], where ND/E is the Net Debt/Equity ratio.

Unlevered Beta = Levered Beta/[1+(1-(-Income Tax/Before Tax Earnings))*(Net Debt/Market Capitalization)].

The Net Debt, Income Tax & Before Tax Earnings figures are taken from the last annual reported statements. The market value of the equity (E) is calculated based on the last close share price.