Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Amazon.com Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The financial information reveals a significant shift in free cash flow to the firm (FCFF) over the observed period. Net cash provided by operating activities demonstrates a consistent upward trend, while FCFF exhibits a more volatile pattern, transitioning from negative values to positive, then leveling off, and finally declining.
- Operating Cash Flow
- Net cash provided by operating activities increased steadily from US$46,327 million in 2021 to US$139,514 million in 2025. This represents a substantial growth rate, indicating improved operational efficiency and/or increased sales volume over the period. The increase from 2022 to 2023 was particularly notable.
- Free Cash Flow to the Firm (FCFF)
- FCFF was negative in both 2021 and 2022, registering at -US$14,581 million and -US$11,263 million respectively. This suggests that, during these years, the company’s cash inflows from operations were insufficient to cover its investments in working capital and capital expenditures. A substantial positive shift occurred in 2023, with FCFF reaching US$38,692 million. This positive trend continued into 2024, with FCFF at US$39,410 million, indicating improved cash generation capabilities. However, FCFF decreased significantly in 2025 to US$9,850 million, suggesting a potential slowdown in cash generation despite continued growth in operating cash flow.
The divergence between the upward trend in operating cash flow and the fluctuating FCFF suggests that changes in investment activities, such as capital expenditures or working capital requirements, are significantly impacting the company’s available free cash flow. The substantial increase in FCFF from 2022 to 2023 warrants further investigation to understand the drivers behind this improvement. The subsequent decline in FCFF in 2025, despite continued growth in operating cash flow, also merits attention to identify potential factors contributing to this reduction.
Interest Paid, Net of Tax
Amazon.com Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2 2025 Calculation
Cash paid for interest, net of capitalized interest, tax = Cash paid for interest, net of capitalized interest × EITR
= 1,949 × 19.60% = 382
The analysis reveals fluctuations in both the effective income tax rate and cash paid for interest, net of capitalized interest, net of tax, over the five-year period. A notable divergence exists between the two metrics, suggesting a complex interplay between financing costs and tax obligations.
- Effective Income Tax Rate (EITR)
- The effective income tax rate experienced significant volatility. It increased substantially from 12.56% in 2021 to 54.19% in 2022, before decreasing to 19.00% in 2023. A further decline to 13.50% was observed in 2024, followed by a modest increase to 19.60% in 2025. This pattern indicates potential shifts in the company’s earnings mix, tax credit utilization, or changes in tax legislation impacting its tax liabilities.
- Cash Paid for Interest, Net of Tax
- Cash paid for interest, net of capitalized interest, net of tax, decreased from US$1,549 million in 2021 to US$981 million in 2022. A substantial increase was then recorded in 2023, reaching US$2,521 million. This was followed by a decrease to US$2,045 million in 2024 and a further decline to US$1,567 million in 2025. The fluctuations suggest changes in the company’s debt levels, interest rates on its debt, or the amount of interest capitalized.
The inverse relationship between the EITR and cash paid for interest is not consistently maintained. While the EITR peaked in 2022, cash paid for interest reached its lowest point during the same period. Conversely, the highest cash paid for interest occurred in 2023, while the EITR was comparatively lower. This suggests that factors beyond the tax rate are significantly influencing the net cash outflow for interest expenses. Further investigation into the company’s debt structure, capitalization policies, and tax planning strategies would be necessary to fully understand these dynamics.
The return to a level of cash paid for interest in 2025 similar to that of 2021, coupled with a stable EITR, may indicate a normalization of financing costs and tax obligations after the significant shifts observed in the preceding years.
Enterprise Value to FCFF Ratio, Current
Amazon.com Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 2,215,422) |
| Free cash flow to the firm (FCFF) | 9,850) |
| Valuation Ratio | |
| EV/FCFF | 224.92 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Home Depot Inc. | 24.51 |
| Lowe’s Cos. Inc. | 21.48 |
| TJX Cos. Inc. | 40.10 |
| EV/FCFF, Sector | |
| Consumer Discretionary Distribution & Retail | 42.88 |
| EV/FCFF, Industry | |
| Consumer Discretionary | 42.72 |
Based on: 10-K (reporting date: 2025-12-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
Amazon.com Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 2,215,422) | 2,395,510) | 1,776,793) | 1,075,370) | 1,582,224) | |
| Free cash flow to the firm (FCFF)2 | 9,850) | 39,410) | 38,692) | (11,263) | (14,581) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 224.92 | 60.78 | 45.92 | — | — | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Home Depot Inc. | 22.58 | 21.94 | 27.17 | 25.12 | 20.22 | |
| Lowe’s Cos. Inc. | 18.55 | 24.69 | 19.56 | 19.56 | 14.88 | |
| TJX Cos. Inc. | 32.22 | 24.44 | 31.93 | 33.03 | 18.30 | |
| EV/FCFF, Sector | ||||||
| Consumer Discretionary Distribution & Retail | — | 44.15 | 38.32 | 111.04 | 130.00 | |
| EV/FCFF, Industry | ||||||
| Consumer Discretionary | — | 41.98 | 33.07 | 51.09 | 60.31 | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
3 2025 Calculation
EV/FCFF = EV ÷ FCFF
= 2,215,422 ÷ 9,850 = 224.92
4 Click competitor name to see calculations.
The Enterprise Value to Free Cash Flow to the Firm (EV/FCFF) ratio exhibits significant fluctuations over the observed period. Initial values are unavailable for 2021 and 2022, but become available in 2023 and demonstrate a marked increase through 2025.
- Enterprise Value (EV)
- Enterprise Value decreased substantially from 2021 to 2022, falling from US$1,582,224 million to US$1,075,370 million. A recovery was then observed in 2023, rising to US$1,776,793 million, followed by further growth to US$2,395,510 million in 2024. A slight decrease is noted in 2025, with EV settling at US$2,215,422 million.
- Free Cash Flow to the Firm (FCFF)
- Free Cash Flow to the Firm was negative in both 2021 and 2022, registering at -US$14,581 million and -US$11,263 million respectively. A substantial positive shift occurred in 2023, with FCFF reaching US$38,692 million. FCFF remained relatively stable in 2024 at US$39,410 million, before declining significantly to US$9,850 million in 2025.
- EV/FCFF Ratio
- The EV/FCFF ratio was not calculable for 2021 and 2022 due to negative FCFF values. In 2023, the ratio was 45.92. This increased to 60.78 in 2024. A dramatic increase is then observed in 2025, with the ratio reaching 224.92. This substantial rise in 2025 is primarily driven by the significant decrease in FCFF, despite a relatively small decrease in Enterprise Value.
The increasing EV/FCFF ratio, particularly the pronounced increase in 2025, suggests that the market is valuing each dollar of free cash flow generated by the firm at a progressively higher multiple. The negative FCFF in the earlier years indicates the firm was consuming more cash than it generated, while the subsequent positive values demonstrate an improvement in cash generation. However, the recent decline in FCFF, coupled with a high EV, warrants further investigation to understand the underlying drivers and potential implications for future performance.