Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Kraft Foods Group Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
The analysis of the annual cash flow data reveals a declining trend over the three-year period from 2012 to 2014. Both net cash provided by operating activities and free cash flow to the firm experienced a noticeable decrease each year.
- Net cash provided by operating activities
-
In 2012, the net cash provided by operating activities was at a high of 3,035 million US dollars. This figure declined significantly in 2013 to 2,043 million, representing a reduction of approximately 33%. The downward trend continued, albeit at a slower pace, with 2,020 million recorded in 2014. This shows a cumulative decrease over the three years, reflecting potential challenges in operational cash generation capability or changes in working capital management.
- Free cash flow to the firm (FCFF)
-
The free cash flow to the firm also declined over the same period, aligning closely with the trend in operating cash flow. Starting at 2,715 million US dollars in 2012, FCFF decreased to 1,936 million in 2013, marking a drop of about 29%. In 2014, the free cash flow further decreased slightly to 1,848 million. This consistent decline suggests restrained liquidity and reduced capacity for expansion, debt repayment, or shareholder distributions without additional financing.
Overall, the observed patterns indicate shrinking cash flow resources both from operating activities and available free cash, which could warrant further investigation into the company's operational efficiency, capital expenditure patterns, or external economic factors influencing cash generation.
Interest Paid, Net of Tax
Kraft Foods Group Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
2 2014 Calculation
Cash paid, interest, tax = Cash paid, interest × EITR
= 487 × 25.80% = 126
The analysis of the financial data over the three-year period reveals several notable trends.
- Effective Income Tax Rate (EITR)
- The effective income tax rate showed a slight increase from 33.1% in 2012 to 33.6% in 2013, indicating a marginal rise in the tax burden relative to income. However, in 2014, there was a significant decline to 25.8%, suggesting a substantial reduction in tax expenses or a change in the taxable income structure that resulted in a lower rate.
- Cash Paid for Interest, Net of Tax (US$ in millions)
- The cash paid on interest, net of tax, increased markedly over the period. In 2012, the amount was $102 million, which more than tripled to $319 million in 2013, and then rose further to $361 million in 2014. This continuous upward trend indicates growing financing costs or increased borrowing levels over the years, impacting the company's cash outflows related to interest payments.
Overall, the data suggests a favorable tax situation in the latest period combined with rising interest expenses, which may influence the company's net profitability and cash flow management strategies going forward.
Enterprise Value to FCFF Ratio, Current
Kraft Foods Group Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 59,575) |
| Free cash flow to the firm (FCFF) | 1,848) |
| Valuation Ratio | |
| EV/FCFF | 32.23 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| lululemon athletica inc. | 13.38 |
| Nike Inc. | 2,041.76 |
Based on: 10-K (reporting date: 2014-12-27).
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
Kraft Foods Group Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Enterprise value (EV)1 | 46,470) | 41,145) | 39,370) | |
| Free cash flow to the firm (FCFF)2 | 1,848) | 1,936) | 2,715) | |
| Valuation Ratio | ||||
| EV/FCFF3 | 25.14 | 21.25 | 14.50 | |
| Benchmarks | ||||
| EV/FCFF, Competitors4 | ||||
| lululemon athletica inc. | — | — | — | |
| Nike Inc. | — | — | — | |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
3 2014 Calculation
EV/FCFF = EV ÷ FCFF
= 46,470 ÷ 1,848 = 25.14
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited a consistent upward trend over the three-year period, increasing from $39,370 million in 2012 to $46,470 million in 2014. This represents a growth of approximately 18% from 2012 to 2014, indicating an expansion in the company's valuation or market perception.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm demonstrated a declining trajectory during the same period. Starting at $2,715 million in 2012, it decreased to $1,936 million in 2013 and further to $1,848 million in 2014. This downward movement reflects a reduction of about 32% over two years, suggesting potential challenges in operational cash generation or increased capital expenditures.
- EV/FCFF Ratio
- The EV to FCFF ratio increased markedly from 14.5 in 2012 to 25.14 in 2014. The rising ratio is primarily driven by the combination of growing enterprise value and shrinking free cash flow. This escalation may imply that the company's valuation is becoming more stretched relative to its cash-generating capability, potentially raising concerns about valuation metrics or future cash flow expectations.