Unlevered Beta Calculator

Unlevered Beta Calculator calculator can be used to calculate the unlevered beta (asset beta) of a company by adjusting the levered beta for its debt-to-equity ratio. This is useful for comparing the systematic risk of companies with different capital structures.

Input Parameters

Calculation Results

Calculation Formula

Unlevered Beta (βU) = Levered Beta (βL) / [1 + (1 - Tax Rate) * (Debt-to-Equity Ratio)]

Where:
βU = Unlevered Beta
βL = Levered Beta
D/E = Debt-to-Equity Ratio
Tax Rate = Corporate Tax Rate

Result

Unlevered Beta (βU):

0.00

Unlevered Beta Calculator Calculator Usage Guide

Learn how to use the Unlevered Beta Calculator calculator and its working principles

How to Use the Unlevered Beta Calculator

  1. Enter the Levered Beta (βL) of the company. This is the beta value of the company's equity.
  2. Enter the Debt-to-Equity Ratio (D/E). This is the ratio of the company's total debt to its total equity.
  3. Enter the Tax Rate (%). This is the company's corporate tax rate.
  4. Click the Calculate button to compute the unlevered beta.
  5. The result will be displayed as Unlevered Beta (βU).

Understanding Unlevered Beta

Unlevered beta (also known as asset beta) measures the systematic risk of a company's assets, independent of its capital structure. It is useful for comparing the risk of companies with different levels of debt.

The formula to calculate unlevered beta is:

βU = βL / [1 + (1 - Tax Rate) * (D/E)]

Where:

  • βU = Unlevered Beta
  • βL = Levered Beta
  • D/E = Debt-to-Equity Ratio
  • Tax Rate = Corporate Tax Rate

Example

Suppose a company has a levered beta of 1.5, a debt-to-equity ratio of 1.2, and a tax rate of 30%. The unlevered beta would be calculated as follows:

βU = 1.5 / [1 + (1 - 0.30) * 1.2] = 1.5 / [1 + 0.84] = 1.5 / 1.84 ≈ 0.8162