Enterprise Value to FCFF (EV/FCFF)
Paying user area
Try for free
Automatic Data Processing Inc. pages available for free this week:
- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Selected Financial Data since 2005
- Debt to Equity since 2005
- Price to Sales (P/S) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Automatic Data Processing Inc. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Free Cash Flow to The Firm (FCFF)
Automatic Data Processing Inc., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
- Net cash flows provided by operating activities
- Over the six-year period, net cash flows from operating activities exhibited a consistent upward trend. Starting at approximately 1.86 billion US dollars in mid-2016, the figure increased steadily each year, reaching approximately 3.09 billion US dollars by mid-2021. This demonstrates a strong and sustained ability of the firm to generate cash from its core business operations, with overall growth exceeding 66% across the timeframe.
- Free cash flow to the firm (FCFF)
- Free cash flow to the firm also showed a consistent increase from about 1.50 billion US dollars in mid-2016 to approximately 2.63 billion US dollars in mid-2021. This represents a cumulative growth of roughly 75%, indicating improving cash availability after accounting for capital expenditures. The growth trend in FCFF parallels that of operating cash flows but at slightly lower absolute values, reflecting capital investments that are stable or growing moderately relative to operating cash generation.
- General observations
- The data suggests strong operational performance with increasing cash generation capability. Both operating cash flows and free cash flows demonstrate healthy and continuous growth, implying effective management of operations and investments. There appear to be no significant fluctuations or periods of decline, which indicates stability in the firm's cash flow generation and capital expenditure discipline during the period analyzed.
Interest Paid, Net of Tax
Automatic Data Processing Inc., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
2 2021 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= × =
- Effective Income Tax Rate (EITR)
- The effective income tax rate demonstrates a consistent downward trend from 33.2% in mid-2016 to 22.7% in mid-2021. This decline is gradual but marked, indicating a reduction of over 10 percentage points across the five-year span. The most significant decreases occur between 2017 and 2019, where the rate drops from 31.5% to 23.7%. Subsequently, the rate stabilizes around 22.5% to 22.7% in 2020 and 2021, suggesting the company has reached a lower steady-state tax burden.
- Cash Paid for Interest, Net of Tax
- Cash payments for interest, net of tax, reveal a more variable pattern with a general rise followed by a notable decline. The amount nearly doubles from $25,050 thousand in mid-2016 to a peak of $97,283 thousand in mid-2019. This sharp increase indicates a growing interest expense burden during this period. However, after 2019, the interest payments decrease substantially, falling to $81,220 thousand in 2020 and further down to $41,046 thousand in 2021. The reduction from the peak suggests either a decrease in interest-bearing debt or refinancing at more favorable rates, thus lowering interest expenses net of tax.
Enterprise Value to FCFF Ratio, Current
Automatic Data Processing Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Accenture PLC | |
| Adobe Inc. | |
| Cadence Design Systems Inc. | |
| CrowdStrike Holdings Inc. | |
| Fair Isaac Corp. | |
| International Business Machines Corp. | |
| Intuit Inc. | |
| Microsoft Corp. | |
| Oracle Corp. | |
| Palantir Technologies Inc. | |
| Palo Alto Networks Inc. | |
| Salesforce Inc. | |
| ServiceNow Inc. | |
| Synopsys Inc. | |
| Workday Inc. | |
| EV/FCFF, Sector | |
| Software & Services | |
| EV/FCFF, Industry | |
| Information Technology | |
Based on: 10-K (reporting date: 2021-06-30).
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
Automatic Data Processing Inc., historical EV/FCFF calculation, comparison to benchmarks
| Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Enterprise value (EV)1 | |||||||
| Free cash flow to the firm (FCFF)2 | |||||||
| Valuation Ratio | |||||||
| EV/FCFF3 | |||||||
| Benchmarks | |||||||
| EV/FCFF, Competitors4 | |||||||
| Accenture PLC | |||||||
| Adobe Inc. | |||||||
| Cadence Design Systems Inc. | |||||||
| CrowdStrike Holdings Inc. | |||||||
| Fair Isaac Corp. | |||||||
| International Business Machines Corp. | |||||||
| Intuit Inc. | |||||||
| Microsoft Corp. | |||||||
| Oracle Corp. | |||||||
| Palantir Technologies Inc. | |||||||
| Palo Alto Networks Inc. | |||||||
| Salesforce Inc. | |||||||
| ServiceNow Inc. | |||||||
| Synopsys Inc. | |||||||
| Workday Inc. | |||||||
| EV/FCFF, Sector | |||||||
| Software & Services | |||||||
| EV/FCFF, Industry | |||||||
| Information Technology | |||||||
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
3 2021 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited a substantial upward trend over the analyzed period. Starting at approximately 5.88 billion USD in mid-2016, it surged significantly to over 21.43 billion USD by mid-2017. This growth continued in subsequent years, reaching approximately 31.51 billion USD in mid-2018 and further escalating to around 43.67 billion USD by mid-2019. A decline was observed in mid-2020, with the value dropping to approximately 31.35 billion USD, before ascending again sharply to reach about 55.22 billion USD in mid-2021.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm demonstrated a consistent and steady increase throughout the observed timeframe. Beginning at roughly 1.50 billion USD in mid-2016, it rose annually, reaching around 1.71 billion USD in mid-2017, and continued its upward trajectory to approximately 2.12 billion USD in mid-2018. This increment persisted with values of 2.22 billion USD in mid-2019, 2.49 billion USD in mid-2020, culminating at about 2.63 billion USD in mid-2021.
- EV/FCFF Ratio
- The ratio of enterprise value to free cash flow to the firm displayed considerable volatility across the years. Starting at a relatively low multiple of 3.92 in 2016, it escalated sharply to 12.54 in 2017 and increased further to 14.87 in 2018. The ratio peaked at 19.68 in 2019, suggesting a growing premium on enterprise value relative to cash flow. It then decreased to 12.58 in 2020, indicating a revaluation or improvement in cash flow relative to EV, before experiencing another surge to 21.01 in 2021, reaching the highest point in the observed period.
- Analysis Summary
- The company experienced substantial growth in enterprise value, especially notable between 2016 and 2019, with a temporary decline in 2020 followed by a significant rebound in 2021. Concurrently, free cash flow to the firm increased steadily at a moderate pace, reflecting consistent operational cash generation enhancements. The EV/FCFF ratio's fluctuations point to changing market valuations or operational performance perceptions, with notable spikes suggesting periods of increased market optimism or valuation expansion relative to cash flows, particularly evident in 2019 and 2021. The data indicates a generally positive growth trajectory in cash flow but highlights volatility in valuation multiples over the period.