Microsoft Corp., FCFF calculation

USD $ in millions

	12 months ended	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014	Jun 30, 2013
	Net income
	Net noncash charges
	Changes in operating assets and liabilities
	Net cash from operations
	Cash paid for interest on debt, net of tax¹
	Additions to property and equipment
	Free cash flow to the firm (FCFF)

Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the Microsoft Corp.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	Microsoft Corp.’s FCFF increased from 2016 to 2017 and from 2017 to 2018.

Microsoft Corp., interest paid, net of tax calculation

USD $ in millions

	12 months ended	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014	Jun 30, 2013
	Effective Income Tax Rate (EITR)

	EITR¹
	Interest Paid, Net of Tax
	Cash paid for interest on debt, before tax
	Less: Cash paid for interest on debt, tax²
	Cash paid for interest on debt, net of tax

2018 Calculations

² Cash paid for interest on debt, tax = Cash paid for interest on debt × EITR
= hidden × hidden = hidden

Microsoft Corp., current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (USD $ in millions)
Enterprise value (EV)
Free cash flow to the firm (FCFF)
Ratio
EV/FCFF
Benchmarks
EV/FCFF, Competitors
Adobe Inc.
Alphabet Inc.
Facebook Inc.
International Business Machines Corp.
Intuit Inc.
Oracle Corp.
salesforce.com inc.
EV/FCFF, Sector
Software & Computer Services
EV/FCFF, Industry
Technology

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.

Microsoft Corp., historical EV/FCFF calculation, comparison to benchmarks

		Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014	Jun 30, 2013
	Selected Financial Data (USD $ in millions)
	Enterprise value (EV)¹
	Free cash flow to the firm (FCFF)²
	Ratio
	EV/FCFF³
	Benchmarks
	EV/FCFF, Competitors
	Adobe Inc.
	Alphabet Inc.
	Facebook Inc.
	International Business Machines Corp.
	Intuit Inc.
	Oracle Corp.
	salesforce.com inc.
	EV/FCFF, Sector
	Software & Computer Services
	EV/FCFF, Industry
	Technology

2018 Calculations

³ EV/FCFF = EV ÷ FCFF
= hidden ÷ hidden = hidden

Ratio	Description	The company
EV/FCFF	Enterprise value to free cash flow to the firm is whole company valuation indicator.	Microsoft Corp.’s EV/FCFF ratio increased from 2016 to 2017 and from 2017 to 2018.

	Microsoft Corp.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

	All companies
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

Microsoft Corp. (MSFT)

Enterprise Value to FCFF (EV/FCFF)