Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Costco Wholesale Corp., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2026-08-30), 10-K (reporting date: 2025-08-31), 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29).
An analysis of the cash flow trajectory from 2021 to 2026 reveals a period of initial volatility followed by sustained growth in both operational liquidity and firm-level free cash flow.
- Net Cash Provided by Operating Activities
- Operating cash flows experienced a decline in 2022, falling to 7,392 million US dollars from 8,958 million US dollars in 2021. However, a strong recovery occurred in 2023, with values increasing to 11,068 million US dollars. This upward momentum continues through the projected periods, reaching 15,817 million US dollars by August 2026, representing a consistent expansion of the operational cash base.
- Free Cash Flow to the Firm (FCFF)
- FCFF mirrored the volatility of operating cash flows, reaching a low of 3,610 million US dollars in 2022. A substantial rebound was noted in 2023 at 6,838 million US dollars, followed by a marginal contraction in 2024 to 6,727 million US dollars. Subsequent growth is observed, with FCFF escalating to 7,916 million US dollars in 2025 and reaching 9,460 million US dollars in 2026.
- Cash Flow Conversion and Capital Allocation
- The relationship between operating cash flow and FCFF indicates a consistent allocation of resources toward investments. While the conversion ratio dipped significantly in 2022, it stabilized in the following years, with FCFF generally representing approximately 60% of net cash provided by operating activities. This suggests a disciplined approach to capital expenditures relative to operational gains throughout the analyzed period.
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Interest Paid, Net of Tax
Costco Wholesale Corp., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2026-08-30), 10-K (reporting date: 2025-08-31), 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29).
2 2026 Calculation
Cash paid during the year for interest, tax = Cash paid during the year for interest × EITR
= 103 × 24.70% = 25
The financial data indicates a sustained reduction in the net cash outflows associated with interest payments over the period from August 2021 to August 2026.
- Net Interest Outflow Trends
- A consistent downward trajectory is observed in the cash paid for interest, net of tax, which declined from 113 million USD in August 2021 to 78 million USD by August 2026. This represents an overall decrease of approximately 31%. Despite a marginal increase in September 2024 to 98 million USD, the broader trend reflects significant reductions, particularly between the 2022 and 2023 periods, and again between 2024 and 2025.
- Effective Income Tax Rate Stability
- The effective income tax rate (EITR) remained relatively stable throughout the analysis period, oscillating within a narrow range between 24.00% and 25.90%. Because the tax rate did not undergo significant shifts, the decline in net interest paid is likely driven by fundamental changes in debt principal or interest rate obligations rather than fluctuations in the tax shield.
The combination of a decreasing trend in net interest payments and a stable effective tax rate suggests an improvement in the after-tax cost of debt servicing over the observed timeframe.
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Enterprise Value to FCFF Ratio, Current
Costco Wholesale Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 406,325) |
| Free cash flow to the firm (FCFF) | 9,460) |
| Valuation Ratio | |
| EV/FCFF | 42.95 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Target Corp. | 25.24 |
| Walmart Inc. | 53.92 |
| EV/FCFF, Sector | |
| Consumer Staples Distribution & Retail | 50.99 |
| EV/FCFF, Industry | |
| Consumer Staples | 38.64 |
Based on: 10-K (reporting date: 2026-08-30).
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
Costco Wholesale Corp., historical EV/FCFF calculation, comparison to benchmarks
| Aug 30, 2026 | Aug 31, 2025 | Sep 1, 2024 | Sep 3, 2023 | Aug 28, 2022 | Aug 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Enterprise value (EV)1 | 403,813) | 397,403) | 399,049) | 243,035) | 209,733) | 195,411) | |
| Free cash flow to the firm (FCFF)2 | 9,460) | 7,916) | 6,727) | 6,838) | 3,610) | 5,483) | |
| Valuation Ratio | |||||||
| EV/FCFF3 | 42.69 | 50.20 | 59.32 | 35.54 | 58.09 | 35.64 | |
| Benchmarks | |||||||
| EV/FCFF, Competitors4 | |||||||
| Target Corp. | 20.11 | 12.95 | 21.32 | — | 21.05 | 11.38 | |
| Walmart Inc. | 61.59 | 47.89 | 30.87 | 30.99 | 33.26 | 14.86 | |
| EV/FCFF, Sector | |||||||
| Consumer Staples Distribution & Retail | — | 42.73 | 36.25 | 39.50 | 34.48 | 16.94 | |
| EV/FCFF, Industry | |||||||
| Consumer Staples | — | 35.39 | 31.10 | 30.22 | 30.06 | 20.91 | |
Based on: 10-K (reporting date: 2026-08-30), 10-K (reporting date: 2025-08-31), 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29).
3 2026 Calculation
EV/FCFF = EV ÷ FCFF
= 403,813 ÷ 9,460 = 42.69
4 Click competitor name to see calculations.
The analysis of the Enterprise Value to Free Cash Flow to the Firm (EV/FCFF) ratio reveals a period of significant valuation volatility followed by a gradual trend toward stabilization. The overall trajectory is characterized by sharp expansions in market valuation that periodically outpaced the growth of cash flow generation.
- Enterprise Value Trends
- Enterprise Value exhibited a consistent upward trajectory, growing from 195,411 million US$ in 2021 to 403,813 million US$ by 2026. A substantial acceleration is noted between September 2023 and September 2024, where the value increased from 243,035 million US$ to 399,049 million US$, representing a significant jump in the market's valuation of the entity.
- Free Cash Flow to the Firm (FCFF) Performance
- Cash flow generation demonstrated initial instability, with a notable decline to 3,610 million US$ in 2022 from 5,483 million US$ in 2021. However, a strong recovery followed, with FCFF increasing to 6,838 million US$ in 2023 and continuing a growth trend to reach a peak of 9,460 million US$ by August 2026.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio experienced two distinct peaks, reaching 58.09 in 2022 and 59.32 in 2024. The 2022 peak was primarily driven by a contraction in FCFF, while the 2024 peak resulted from the rapid surge in Enterprise Value. Following the 2024 high, a downward trend is observed, with the ratio declining to 50.20 in 2025 and further to 42.69 in 2026. This compression indicates that the growth in free cash flow began to catch up with the expanded enterprise valuation toward the end of the period.
In summary, while the valuation multiple remained elevated compared to 2021 levels, the trend from 2024 to 2026 suggests a moderation in the ratio as operational cash flow growth strengthened relative to the enterprise value.
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