Microsoft Excel LibreOffice Calc

Enterprise Value to FCFF (EV/FCFF)

Difficulty: Intermediate


Free Cash Flow to The Firm (FCFF)

Adobe Systems Inc., FCFF calculation

USD $ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 1, 2017 Dec 2, 2016 Nov 27, 2015 Nov 28, 2014 Nov 29, 2013 Nov 30, 2012
Net income 1,693,954  1,168,782  629,551  268,395  289,985  832,775 
Net noncash charges 828,184  635,731  508,113  569,782  673,769  673,238 
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities 390,715  395,215  331,838  449,305  187,932  (6,433)
Net cash provided by operating activities 2,912,853  2,199,728  1,469,502  1,287,482  1,151,686  1,499,580 
Cash paid for interest, net of tax1 55,016  53,908  40,358  51,162  52,795  49,328 
Purchases of property and equipment (178,122) (203,805) (184,936) (148,332) (188,358) (271,076)
Proceeds from sale of property 57,779  24,260 
Free cash flow to the firm (FCFF) 2,789,747  2,049,831  1,382,703  1,190,312  1,040,383  1,277,832 
Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the Adobe Systems Inc.'s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. Adobe Systems Inc.'s FCFF increased from 2015 to 2016 and from 2016 to 2017.

Interest Paid, Net of Tax

Adobe Systems Inc., interest paid, net of tax calculation

USD $ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 1, 2017 Dec 2, 2016 Nov 27, 2015 Nov 28, 2014 Nov 29, 2013 Nov 30, 2012
Effective Income Tax Rate (EITR)
EITR1 20.76% 18.56% 27.95% 25.73% 18.58% 25.56%
Interest Paid, Net of Tax
Cash paid for interest, before tax 69,430  66,193  56,014  68,886  64,843  66,265 
Less: Cash paid for interest, tax2 14,414  12,285  15,656  17,724  12,048  16,937 
Cash paid for interest, net of tax 55,016  53,908  40,358  51,162  52,795  49,328 

2017 Calculations

2 Cash paid for interest, tax = Cash paid for interest × EITR
= 69,430 × 20.76% = 14,414


Enterprise Value to FCFF Ratio, Current

Adobe Systems Inc., current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (USD $ in thousands)
Enterprise value (EV) 120,768,932 
Free cash flow to the firm (FCFF) 2,789,747 
Ratio
EV/FCFF 43.29
Benchmarks
EV/FCFF, Competitors
Alphabet Inc. 30.12
Facebook Inc. 31.92
International Business Machines Corp. 11.97
Microsoft Corp. 23.12
Oracle Corp. 13.14
salesforce.com inc. 47.21
EV/FCFF, Sector
Software & Computer Services 24.74
EV/FCFF, Industry
Technology 21.97

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

Adobe Systems Inc., historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 1, 2017 Dec 2, 2016 Nov 27, 2015 Nov 28, 2014 Nov 29, 2013 Nov 30, 2012
Selected Financial Data (USD $ in thousands)
Enterprise value (EV)1 93,315,543  51,840,196  42,360,253  33,399,296  28,558,603  16,898,918 
Free cash flow to the firm (FCFF)2 2,789,747  2,049,831  1,382,703  1,190,312  1,040,383  1,277,832 
Ratio
EV/FCFF3 33.45 25.29 30.64 28.06 27.45 13.22
Benchmarks
EV/FCFF, Competitors
Alphabet Inc. 27.18 18.05 24.85 26.71 31.10
Facebook Inc. 29.70 30.03 48.05 57.05 51.77
International Business Machines Corp. 12.73 14.18 11.32 14.03 15.10
Microsoft Corp. 15.52 14.60 12.94 10.67 8.13 6.52
Oracle Corp. 15.07 11.24 12.09 10.98 8.91
salesforce.com inc. 27.87 36.70 53.67 409.10 49.51
EV/FCFF, Sector
Software & Computer Services 20.89 17.42 18.56 17.01 15.85
EV/FCFF, Industry
Technology 18.98 15.00 13.81 14.39 12.66

2017 Calculations

3 EV/FCFF = EV ÷ FCFF
= 93,315,543 ÷ 2,789,747 = 33.45

Ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. Adobe Systems Inc.'s EV/FCFF ratio declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.