# Unlevered Beta Calculator (Asset Beta)

URL: https://speedycalculator.com/calculators/finance/unlevered-beta/
Last updated: 2026-10-25

> The unlevered beta calculator removes the effect of debt from a company's equity beta (Hamada equation) to get its asset beta – the business risk alone – using the tax rate implied by net and pre-tax income and the debt-to-equity ratio.

## Inputs

- Net income
- Pre-tax income
- Total debt
- Total shareholders' equity
- Levered beta (equity beta)
- Target D/E for relevering

## Results

- Corporate tax rate
- D/E ratio
- Unlevered beta
- Relevered beta at target D/E

## Formula

```
Tax rate = 1 − net income ÷ pre-tax income
D/E = total debt ÷ total equity
Unlevered beta = levered beta ÷ [1 + (1 − tax) × D/E]
```

## Explanation

Analysts unlever the betas of comparable companies, average them, then relever at the target company's capital structure to estimate its cost of equity – especially for private companies with no stock price.

### How to use the Unlevered Beta Calculator

- **Net income**
- **Pre-tax income**
- **Total debt**
- **Total shareholders' equity**
- **Levered beta (equity beta)**
- **Target D/E for relevering**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter net income, pre-tax income, total debt, total equity and the levered (equity) beta, and optionally a target D/E to relever.

### Tips

- Take figures from the same financial statements and the same fiscal year.
- Compare ratios with companies in the same industry, not across industries.
- Use several valuation measures together; no single ratio tells the whole story.
- Market prices change every second – refresh the share price before you rely on a result.

### Common mistakes to avoid

- Mixing per-share figures with company totals.
- Using trailing earnings for one company and forward earnings for another.
- Forgetting dilution from options and convertible securities.

### Inputs explained

FieldWhat to enterNet incomeAmount in your currencyPre-tax incomeAmount in your currencyTotal debtAmount in your currencyTotal shareholders' equityAmount in your currencyLevered beta (equity beta)A numberTarget D/E for releveringA number

### What each result means

- **Corporate tax rate** = (1 - [Net income]÷[Pre-tax income])×100
- **D/E ratio** = [Total debt]÷[Total shareholders' equity]
- **Unlevered beta** = [Levered beta (equity beta)]÷(1 + (1 - [Corporate tax rate]÷100)×[D÷E ratio])
- **Relevered beta at target D/E** = [Unlevered beta]×(1 + (1 - [Corporate tax rate]÷100)×[Target D÷E for relevering])

### Example values

How the main result changes when **Net income** changes and everything else stays at the example values above:

Net incomeUnlevered beta39,500,0001.08659,250,0001.00379,000,0000.93298,750,0000.87118,500,0000.816158,000,0000.726

## Worked example

Inputs — Net income: $79,000,000; Pre-tax income: $100,000,000; Total debt: $400,000,000; Total shareholders' equity: $800,000,000; Levered beta (equity beta): 1.3; Target D/E for relevering: 0.25.

Results — Corporate tax rate = 21 %; D/E ratio = 0.5; **Unlevered beta = 0.932**; Relevered beta at target D/E = 1.116.

## FAQ

**What is unlevered beta?**
Beta without the effect of debt – the risk of the business itself.

**Why unlever beta?**
To compare companies with different capital structures or value private firms.

**What is the Hamada equation?**
βu = βL ÷ [1 + (1 − t) × D/E].

**What formula does the Unlevered Beta Calculator use?**
Tax rate = 1 − net income ÷ pre-tax income.


## Sources

- [Corporate Finance Institute – financial ratios](https://corporatefinanceinstitute.com/)