Microsoft Corp., FCFF calculation

US$ in millions

12 months ended:	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017
Net income	72,738)	61,271)	44,281)	39,240)	16,571)	21,204)
Net noncash charges	15,851)	16,405)	17,877)	9,079)	6,846)	16,651)
Changes in operating assets and liabilities	446)	(936)	(1,483)	3,866)	20,467)	1,652)
Net cash from operations	89,035)	76,740)	60,675)	52,185)	43,884)	39,507)
Cash paid for interest on debt, net of tax¹	1,651)	1,724)	2,004)	2,165)	1,994)	1,466)
Additions to property and equipment	(23,886)	(20,622)	(15,441)	(13,925)	(11,632)	(8,129)
Right-of-use assets obtained in exchange for finance lease obligations	(4,234)	(3,290)	(3,467)	(2,532)	(1,933)	—)
Free cash flow to the firm (FCFF)	62,566)	54,552)	43,771)	37,893)	32,313)	32,844)

Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).

¹ See details »

Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the Microsoft Corp. suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	Microsoft Corp. FCFF increased from 2020 to 2021 and from 2021 to 2022.

Microsoft Corp., interest paid, net of tax calculation

US$ in millions

12 months ended:	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017
Effective Income Tax Rate (EITR)
EITR¹	13.10%	13.80%	16.50%	9.80%	16.90%	8.40%
Interest Paid, Net of Tax
Cash paid for interest on debt, before tax	1,900)	2,000)	2,400)	2,400)	2,400)	1,600)
Less: Cash paid for interest on debt, tax²	249)	276)	396)	235)	406)	134)
Cash paid for interest on debt, net of tax	1,651)	1,724)	2,004)	2,165)	1,994)	1,466)

Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).

¹ See details »

² 2022 Calculation
Cash paid for interest on debt, tax = Cash paid for interest on debt × EITR
= 1,900 × 13.10% = 249

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

Selected Financial Data (US$ in millions)
Enterprise value (EV)	2,378,393)
Free cash flow to the firm (FCFF)	62,566)
Valuation Ratio
EV/FCFF	38.01
Benchmarks
EV/FCFF, Competitors¹
Accenture PLC	21.11
Adobe Inc.	26.67
International Business Machines Corp.	16.96
Intuit Inc.	32.90
Oracle Corp.	46.38
Salesforce Inc.	31.72
ServiceNow Inc.	48.54
Synopsys Inc.	40.58
EV/FCFF, Sector
Software & Services	34.59
EV/FCFF, Industry
Information Technology	32.25

Based on: 10-K (reporting date: 2022-06-30).

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.

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

	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017
Selected Financial Data (US$ in millions)
Enterprise value (EV)¹	2,021,362)	2,093,369)	1,487,741)	999,078)	775,247)	512,315)
Free cash flow to the firm (FCFF)²	62,566)	54,552)	43,771)	37,893)	32,313)	32,844)
Valuation Ratio
EV/FCFF³	32.31	38.37	33.99	26.37	23.99	15.60
Benchmarks
EV/FCFF, Competitors⁴
Accenture PLC	16.99	24.76	17.90	18.49	17.18	19.43
Adobe Inc.	20.82	33.61	40.43	40.48	31.36	33.45
International Business Machines Corp.	16.47	13.10	9.35	12.86	12.27	—
Intuit Inc.	32.85	48.64	37.90	33.30	27.69	25.66
Oracle Corp.	31.60	16.36	14.99	14.03	11.11	15.07
Salesforce Inc.	35.97	44.91	39.63	41.21	40.68	—
ServiceNow Inc.	40.86	60.36	84.56	73.46	75.66	—
Synopsys Inc.	30.82	38.59	42.88	33.32	37.07	21.50
EV/FCFF, Sector
Software & Services	29.16	31.89	27.11	23.31	20.82	—
EV/FCFF, Industry
Information Technology	27.02	28.00	24.24	19.79	17.32	—

Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).

¹ See details »

² See details »

³ 2022 Calculation
EV/FCFF = EV ÷ FCFF
= 2,021,362 ÷ 62,566 = 32.31

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.	Microsoft Corp. EV/FCFF ratio increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.

Microsoft Corp. (NASDAQ:MSFT)

Enterprise Value to FCFF (EV/FCFF)

Free Cash Flow to The Firm (FCFF)

Interest Paid, Net of Tax

Enterprise Value to FCFF Ratio, Current

Enterprise Value to FCFF Ratio, Historical