GlaxoSmithKline PLC, FCFF calculation

US$ in millions, translated from GBP £

12 months ended:	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010
Profit attributable to shareholders	4,655)	9,009)	7,424)	8,174)	2,515)
Profit attributable to non-controlling interests	127)	318)	291)	306)	337)
Net noncash charges	1,765)	1,435)	2,207)	2,977)	2,335)
Changes in working capital	1,116)	93)	(3,950)	(2,752)	4,274)
Net cash inflow from operating activities	7,663)	10,855)	5,972)	8,706)	9,461)
Interest paid, net of tax¹	1,139)	1,051)	898)	847)	700)
Purchase of property, plant and equipment	(2,006)	(1,969)	(1,709)	(1,434)	(1,561)
Proceeds from sale of property, plant and equipment	66)	76)	111)	155)	142)
Purchase of intangible assets	(951)	(850)	(763)	(629)	(956)
Proceeds from sale of intangible assets	557)	225)	1,717)	368)	194)
Free cash flow to the firm (FCFF)	6,467)	9,389)	6,226)	8,013)	7,980)

Based on: 20-F (reporting date: 2014-12-31), 20-F (reporting date: 2013-12-31), 20-F (reporting date: 2012-12-31), 20-F (reporting date: 2011-12-31), 20-F (reporting date: 2010-12-31).

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Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the GlaxoSmithKline PLC suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	GlaxoSmithKline PLC FCFF increased from 2012 to 2013 but then slightly decreased from 2013 to 2014 not reaching 2012 level.

GlaxoSmithKline PLC, interest paid, net of tax calculation

US$ in millions, translated from GBP £

12 months ended:	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010
Earnings before tax (EBT)
Profit attributable to shareholders	4,655)	9,009)	7,424)	8,174)	2,515)
Add: Net income attributable to noncontrolling interest	127)	318)	291)	306)	337)
Add: Income tax expense	231)	1,689)	3,168)	3,480)	2,007)
EBT	5,013)	11,016)	10,883)	11,961)	4,859)
Effective Income Tax Rate (EITR)
EITR¹	4.62%	15.33%	29.11%	29.10%	41.31%
Interest Paid, Net of Tax
Interest paid, before tax	1,194)	1,241)	1,267)	1,195)	1,193)
Less: Interest paid, tax²	55)	190)	369)	348)	493)
Interest paid, net of tax	1,139)	1,051)	898)	847)	700)

Based on: 20-F (reporting date: 2014-12-31), 20-F (reporting date: 2013-12-31), 20-F (reporting date: 2012-12-31), 20-F (reporting date: 2011-12-31), 20-F (reporting date: 2010-12-31).

¹ 2014 Calculation
EITR = 100 × Income tax expense ÷ EBT
= 100 × 231 ÷ 5,013 = 4.62%

² 2014 Calculation
Interest paid, tax = Interest paid × EITR
= 1,194 × 4.62% = 55

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GlaxoSmithKline PLC, current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (US$ in millions, translated from GBP £)
Enterprise value (EV)	152,392)
Free cash flow to the firm (FCFF)	6,467)
Valuation Ratio
EV/FCFF	23.56
Benchmarks
EV/FCFF, Competitors¹
AbbVie Inc.	13.70
Amgen Inc.	21.08
Bristol-Myers Squibb Co.	8.59
Danaher Corp.	35.83
Eli Lilly & Co.	644.77
Gilead Sciences Inc.	12.16
Johnson & Johnson	18.04
Merck & Co. Inc.	38.48
Pfizer Inc.	30.42
Regeneron Pharmaceuticals Inc.	22.51
Thermo Fisher Scientific Inc.	29.45
Zoetis Inc.	41.04

Based on: 20-F (reporting date: 2014-12-31).

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.

GlaxoSmithKline PLC, historical EV/FCFF calculation, comparison to benchmarks

	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010
Selected Financial Data (US$ in millions, translated from GBP £)
Enterprise value (EV)¹	152,392)	171,728)	144,664)	129,989)	114,932)
Free cash flow to the firm (FCFF)²	6,467)	9,389)	6,226)	8,013)	7,980)
Valuation Ratio
EV/FCFF³	23.56	18.29	23.24	16.22	14.40
Benchmarks
EV/FCFF, Competitors⁴
AbbVie Inc.	—	—	—	—	—
Amgen Inc.	—	—	—	—	—
Bristol-Myers Squibb Co.	—	—	—	—	—
Danaher Corp.	—	—	—	—	—
Eli Lilly & Co.	—	—	—	—	—
Gilead Sciences Inc.	—	—	—	—	—
Johnson & Johnson	—	—	—	—	—
Merck & Co. Inc.	—	—	—	—	—
Pfizer Inc.	—	—	—	—	—
Regeneron Pharmaceuticals Inc.	—	—	—	—	—
Thermo Fisher Scientific Inc.	—	—	—	—	—
Zoetis Inc.	—	—	—	—	—

Based on: 20-F (reporting date: 2014-12-31), 20-F (reporting date: 2013-12-31), 20-F (reporting date: 2012-12-31), 20-F (reporting date: 2011-12-31), 20-F (reporting date: 2010-12-31).

¹ See details »

² See details »

³ 2014 Calculation
EV/FCFF = EV ÷ FCFF
= 152,392 ÷ 6,467 = 23.56

⁴ Click competitor name to see calculations.

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Valuation ratio	Description	The company
EV/FCFF	Enterprise value to free cash flow to the firm is whole company valuation indicator.	GlaxoSmithKline PLC EV/FCFF ratio decreased from 2012 to 2013 but then increased from 2013 to 2014 exceeding 2012 level.

GlaxoSmithKline PLC (NYSE:GSK)

Enterprise Value to FCFF (EV/FCFF)

Free Cash Flow to The Firm (FCFF)

Interest Paid, Net of Tax

Enterprise Value to FCFF Ratio, Current

Enterprise Value to FCFF Ratio, Historical