Enterprise Value to FCFF (EV/FCFF)
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- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Analysis of Revenues
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Free Cash Flow to The Firm (FCFF)
Amazon.com Inc., FCFF calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
- Net Cash Provided by Operating Activities
- The net cash provided by operating activities showed significant fluctuations over the five-year period. It decreased notably from 66,064 million USD in 2020 to 46,327 million USD in 2021, indicating a reduction in operational cash inflows during that year. In 2022, the cash inflows remained relatively stable, with a slight increase to 46,752 million USD. A strong recovery was observed in 2023, with operating cash flow rising sharply to 84,946 million USD, and this positive trend continued into 2024, reaching 115,877 million USD. Overall, the cash flow from operations experienced a downward trend initially, followed by a robust recovery and growth in the last two years.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm exhibited more volatility compared to operating cash flow. In 2020, the FCFF was positive at 20,869 million USD. However, it turned negative in 2021 and 2022, with values of -14,581 million USD and -11,263 million USD respectively, indicating that capital expenditures and other investments exceeded operating cash flows during these years. The firm experienced a notable turnaround in 2023, with FCFF increasing substantially to 38,693 million USD, a positive indicator of improved cash generation after investment. This upward trend continued marginally into 2024, with a slight increase to 39,410 million USD. The data suggest that after two challenging years, the firm improved its free cash generation significantly in the most recent periods.
- Summary of Trends
- There is evidence of cyclical performance in the firm's cash generation capabilities, with operating cash flows dipping in the early part of the period under review before recovering strongly. The FCFF trend underscores periods of heavy investment or capital outlays in 2021 and 2022, which likely constrained free cash availability, followed by a restoration of positive free cash flow in subsequent years. The increasing operating cash flow and recovery in FCFF in 2023 and 2024 may reflect improved operational efficiency, effective capital management, or a combination of both.
Interest Paid, Net of Tax
Amazon.com Inc., interest paid, net of tax calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
2 2024 Calculation
Cash paid for interest, net of capitalized interest, tax = Cash paid for interest, net of capitalized interest × EITR
= × =
- Effective Income Tax Rate (EITR)
- The effective income tax rate exhibited significant fluctuations throughout the observed periods. Starting at a low rate of 11.84% in 2020, the rate slightly increased to 12.56% in 2021. However, in 2022, there was a marked and considerable rise to 54.19%, representing a substantial departure from previous years' figures. Subsequently, the tax rate reverted closer to earlier levels, decreasing to 18.96% in 2023 and then further to 13.5% in 2024. This volatility might indicate the impact of extraordinary tax events or adjustments in tax legislation during 2022, followed by normalization in later years.
- Cash Paid for Interest, Net of Capitalized Interest, Net of Tax (US$ in millions)
- The cash outflow related to interest payments demonstrated a variable trend over the period. The amount increased modestly from $1,437 million in 2020 to $1,549 million in 2021. The figure then decreased significantly to $981 million in 2022, before sharply rising to $2,522 million in 2023, the highest in the series. In 2024, the interest cash outflow slightly declined to $2,045 million but remained substantially elevated compared to earlier years. This pattern suggests fluctuations in debt levels, interest rates, or refinancing activities affecting interest expenses, with a notable spike in payments in 2023 potentially reflecting increased borrowing or refinancing costs.
Enterprise Value to FCFF Ratio, Current
Amazon.com Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Home Depot Inc. | |
| Lowe’s Cos. Inc. | |
| TJX Cos. Inc. | |
| EV/FCFF, Sector | |
| Consumer Discretionary Distribution & Retail | |
| EV/FCFF, Industry | |
| Consumer Discretionary | |
Based on: 10-K (reporting date: 2024-12-31).
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, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | ||||||
| Free cash flow to the firm (FCFF)2 | ||||||
| Valuation Ratio | ||||||
| EV/FCFF3 | ||||||
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
| EV/FCFF, Sector | ||||||
| Consumer Discretionary Distribution & Retail | ||||||
| EV/FCFF, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
3 2024 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited fluctuations over the five-year period. Initially, there was a decrease from approximately 1,645 billion USD in 2020 to about 1,582 billion USD in 2021, followed by a more pronounced decline to roughly 1,075 billion USD in 2022. Subsequently, there was a notable recovery and growth, with EV rising substantially to nearly 1,778 billion USD in 2023 and then reaching its highest level of approximately 2,396 billion USD in 2024. This pattern indicates volatility with an overall upward trend, especially marked by the significant increases in the last two years.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm showed considerable variability and volatility during the period. Starting with a positive figure of approximately 20.9 billion USD in 2020, the value turned negative in both 2021 and 2022, with values of roughly -14.6 billion USD and -11.3 billion USD respectively, indicating cash flow challenges or increased investment outflows in those years. However, a strong recovery occurred in 2023, with FCFF rising sharply to around 38.7 billion USD, and this positive momentum was sustained in 2024 with a similar figure near 39.4 billion USD.
- EV/FCFF Ratio
- The EV/FCFF ratio, which measures enterprise value relative to free cash flow, was very high at approximately 78.8x in 2020 but not available for 2021 and 2022, possibly due to negative FCFF in those years which complicates meaningful ratio calculation. The ratio reappeared in 2023, dropping significantly to about 45.9x, which signals a more attractive valuation relative to cash generation compared to 2020. In 2024, this ratio increased again to approximately 60.8x, suggesting a valuation expansion or slightly less efficient cash flow relative to enterprise value than in the previous year but still much lower than in 2020.
- Overall Analysis
- The company experienced significant volatility in both market valuation and free cash flows, with a clear dip in enterprise value and negative cash flow performance around 2021-2022. The rebound in enterprise value in 2023 and 2024 aligns with a strong recovery in free cash flow, indicating improved operational cash generation or a reset in investment strategies. The EV/FCFF ratio trends suggest that the company's valuation became more reasonable in 2023 after a period of negative cash flows, even though it rose again in 2024. This combined movement implies a period of correction and stabilization, followed by renewed investor confidence and operational improvement in recent years.