Microsoft Excel LibreOffice Calc

Facebook Inc. (NASDAQ:FB)

Enterprise Value to FCFF (EV/FCFF)

Intermediate level

Free Cash Flow to The Firm (FCFF)

Facebook Inc., FCFF calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net income 18,485  22,112  15,934  10,217  3,688 
Net noncash charges 10,579  8,689  6,395  5,133  4,127 
Changes in assets and liabilities 7,250  (1,527) 1,887  758  784 
Net cash provided by operating activities 36,314  29,274  24,216  16,108  8,599 
Cash paid during the period for interest, net of tax1 —  1  —  9  6 
Purchases of property and equipment, net (15,102) (13,915) (6,733) (4,491) (2,523)
Free cash flow to the firm (FCFF) 21,212  15,360  17,483  11,626  6,082 

Based on: 10-K (filing date: 2020-01-30), 10-K (filing date: 2019-01-31), 10-K (filing date: 2018-02-01), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-01-28).

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Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the Facebook Inc.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. Facebook Inc.’s FCFF decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.

Interest Paid, Net of Tax

Facebook Inc., interest paid, net of tax calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Effective Income Tax Rate (EITR)
EITR1 25.50% 12.80% 11.60% 18.40% 40.40%
Interest Paid, Net of Tax
Cash paid during the period for interest, before tax —  1  —  11  10 
Less: Cash paid during the period for interest, tax2 —  —  —  2  4 
Cash paid during the period for interest, net of tax —  1  —  9  6 

Based on: 10-K (filing date: 2020-01-30), 10-K (filing date: 2019-01-31), 10-K (filing date: 2018-02-01), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-01-28).

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2 2019 Calculation
Cash paid during the period for interest, tax = Cash paid during the period for interest × EITR
= 0 × 25.50% = 0

Enterprise Value to FCFF Ratio, Current

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

Microsoft Excel LibreOffice Calc
Selected Financial Data (US$ in millions)
Enterprise value (EV) 396,531 
Free cash flow to the firm (FCFF) 21,212 
Valuation Ratio
EV/FCFF 18.69
Benchmarks
EV/FCFF, Competitors1
Adobe Inc. 35.13
Alphabet Inc. 21.00
International Business Machines Corp. 10.85
Intuit Inc. 25.82
Microsoft Corp. 29.54
Oracle Corp. 11.98
salesforce.com inc. 31.01
ServiceNow Inc. 52.08
EV/FCFF, Sector
Software & Computer Services 22.25
EV/FCFF, Industry
Technology 19.21

Based on: 10-K (filing date: 2020-01-30).

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

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

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Enterprise value (EV)1 542,873  434,618  519,216  349,081  292,238 
Free cash flow to the firm (FCFF)2 21,212  15,360  17,483  11,626  6,082 
Valuation Ratio
EV/FCFF3 25.59 28.30 29.70 30.03 48.05
Benchmarks
EV/FCFF, Competitors4
Adobe Inc. 40.48 31.36 33.45 25.29 30.64
Alphabet Inc. 28.19 30.10 27.21 18.22 24.91
International Business Machines Corp. 12.86 12.27 12.20 14.18 11.31
Intuit Inc. 33.30 27.69 25.66 31.97 17.54
Microsoft Corp. 26.19 23.86 15.52 14.60 12.94
Oracle Corp. 14.03 11.11 15.07 11.24 12.09
salesforce.com inc. 41.15 40.55 33.55 34.92 47.12
ServiceNow Inc. 71.37 71.10 52.84 246.84 34.15
EV/FCFF, Sector
Software & Computer Services 25.02 23.81 21.11 17.74 18.57
EV/FCFF, Industry
Technology 21.28 19.16 19.26 15.65 14.04

Based on: 10-K (filing date: 2020-01-30), 10-K (filing date: 2019-01-31), 10-K (filing date: 2018-02-01), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-01-28).

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3 2019 Calculation
EV/FCFF = EV ÷ FCFF
= 542,873 ÷ 21,212 = 25.59

4 Click competitor name to see calculations.

Valuation ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. Facebook Inc.’s EV/FCFF ratio decreased from 2017 to 2018 and from 2018 to 2019.