Microsoft Excel LibreOffice Calc

Enterprise Value to FCFF (EV/FCFF)

Difficulty: Intermediate


Free Cash Flow to The Firm (FCFF)

Broadcom Inc., FCFF calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014 Nov 3, 2013 Oct 28, 2012
Net income (loss) attributable to ordinary shares 1,692  (1,739) 1,364  263  552  563 
Net (income) loss attributable to noncontrolling interest 92  (122)
Net noncash charges 5,753  4,789  990  661  214  204 
Changes in assets and liabilities, net of acquisitions and disposals (986) 483  (36) 251  (44) (74)
Net cash provided by operating activities 6,551  3,411  2,318  1,175  722  693 
Cash paid for interest, net of tax1 304  708  163  71 
Purchases of property, plant and equipment (1,069) (723) (593) (409) (236) (241)
Proceeds from disposals of property, plant and equipment 441  110 
Free cash flow to the firm (FCFF) 6,227  3,401  1,998  837  487  453 
Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the Broadcom Inc.'s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. Broadcom Inc.'s FCFF increased from 2015 to 2016 and from 2016 to 2017.

Interest Paid, Net of Tax

Broadcom Inc., interest paid, net of tax calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014 Nov 3, 2013 Oct 28, 2012
Effective Income Tax Rate (EITR)
EITR1 1.90% -58.00% 5.20% 9.60% 2.80% 3.80%
Interest Paid, Net of Tax
Cash paid for interest, before tax 310  448  172  78 
Less: Cash paid for interest, tax2 (260)
Cash paid for interest, net of tax 304  708  163  71 

2017 Calculations

2 Cash paid for interest, tax = Cash paid for interest × EITR
= 310 × 1.90% = 6


Enterprise Value to FCFF Ratio, Current

Broadcom Inc., current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (USD $ in millions)
Enterprise value (EV) 99,168 
Free cash flow to the firm (FCFF) 6,227 
Ratio
EV/FCFF 15.93
Benchmarks
EV/FCFF, Competitors
Apple Inc. 18.76
Applied Materials Inc. 13.31
Cisco Systems Inc. 11.92
HP Inc. 11.44
Intel Corp. 23.57
NVIDIA Corp. 50.89
Qualcomm Inc. 16.78
Texas Instruments Inc. 23.97
EV/FCFF, Sector
Technology Hardware & Equipment 19.13
EV/FCFF, Industry
Technology 22.15

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

Broadcom Inc., historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014 Nov 3, 2013 Oct 28, 2012
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 116,306  86,119  40,968  29,768  11,871  6,777 
Free cash flow to the firm (FCFF)2 6,227  3,401  1,998  837  487  453 
Ratio
EV/FCFF3 18.68 25.32 20.50 35.59 24.38 14.96
Benchmarks
EV/FCFF, Competitors
Apple Inc. 17.70 11.95 9.80 12.50 10.06 12.81
Applied Materials Inc. 15.58 15.02 20.88 17.35 40.09 7.52
Cisco Systems Inc. 8.85 9.16 8.20 8.07 7.62 6.26
HP Inc. 10.30 9.50 7.88 8.00 6.63 5.36
Intel Corp. 20.93 14.08 11.01 15.26 11.19
NVIDIA Corp. 37.90 13.08 11.73 11.29 6.92
Qualcomm Inc. 14.79 12.55 17.60 14.32 13.08 12.88
Texas Instruments Inc. 21.61 18.62 14.16 17.55 16.24
EV/FCFF, Sector
Technology Hardware & Equipment 16.96 12.70 10.51 12.42 10.19
EV/FCFF, Industry
Technology 18.98 15.00 13.81 14.39 12.66

2017 Calculations

3 EV/FCFF = EV ÷ FCFF
= 116,306 ÷ 6,227 = 18.68

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