Verizon Communications Inc. (VZ)

Free Cash Flow to The Firm (FCFF)

Verizon Communications Inc., FCFF calculation

USD $ in millions

12 months ended	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Net income attributable to Verizon	875	2,404	2,549	3,651	6,428
Net income attributable to noncontrolling interest	9,682	7,794	7,668	6,707	6,155
Net noncash charges	21,332	21,861	22,944	23,718	17,070
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses	(403)	(2,279)	202	(2,511)	(3,033)
Net cash provided by operating activities	31,486	29,780	33,363	31,565	26,620
Interest paid, net of amounts capitalized, net of tax	1,971	2,350	1,236	1,933	1,096
Capital expenditures (including capitalized software)	(16,175)	(16,244)	(16,458)	(17,047)	(17,238)
Free cash flow to the firm (FCFF)	17,282	15,886	18,141	16,451	10,478

Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the Verizon Communications Inc.'s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	Verizon Communications Inc.'s FCFF declined from 2010 to 2011 but then increased from 2011 to 2012 not reaching 2010 level.

Verizon Communications Inc., current EV/FCFF

	Verizon Communications Inc.	Telecommunications
Selected Financial Data (USD $ in millions)
Enterprise value (EV)	245,887
Free cash flow to the firm (FCFF)	17,282
Ratio
EV/FCFF	14.23	11.88

If company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.

Otherwise, if company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.

Verizon Communications Inc., EV/FCFF calculation

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Selected Financial Data (USD $ in millions)
Enterprise value (EV)¹	232,624	199,283	198,336	184,556	160,015
Free cash flow to the firm (FCFF)²	17,282	15,886	18,141	16,451	10,478
EV/FCFF, Comparison to Industry
Verizon Communications Inc.³	13.46	12.54	10.93	11.22	15.27
Industry, Telecommunications	12.09	12.40	11.46	10.58	12.66

2012 Calculations

³ EV/FCFF = EV ÷ FCFF
= 232,624 ÷ 17,282 = 13.46

Ratio	Description	The company
EV/FCFF	Enterprise value to free cash flow to the firm is whole company valuation indicator.	Verizon Communications Inc.'s EV/FCFF ratio increased from 2010 to 2011 and from 2011 to 2012.