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Verizon Communications Inc. (VZ) | Enterprise Value to FCFF (EV/FCFF)

Free Cash Flow to The Firm (FCFF)

Verizon Communications Inc., FCFF calculation

USD $ in millions

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  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.

Enterprise Value to FCFF Ratio, Current

Verizon Communications Inc., current EV/FCFF

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  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.

Enterprise Value to FCFF Ratio, Historical

Verizon Communications Inc., EV/FCFF calculation

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    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.