Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Twenty-First Century Fox Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
Over the six-year period ending June 30, 2018, there is a general upward trajectory in both net cash provided by operating activities and free cash flow to the firm. While intermittent fluctuations occurred between 2014 and 2016, the period concluded with a peak in liquidity generation in 2018.
- Operating Cash Flow Performance
- Net cash provided by operating activities increased from US$ 3,002 million in 2013 to US$ 4,227 million in 2018. A marginal decline was observed in 2014, and a more pronounced contraction occurred in 2016, falling to US$ 3,048 million. However, the subsequent two years showed robust growth, with the final year representing a 11.8% increase over the 2017 figures.
- Free Cash Flow to the Firm (FCFF) Dynamics
- FCFF exhibited a growth pattern similar to operating cash flow, rising from US$ 3,255 million in 2013 to a peak of US$ 4,546 million in 2018. A significant surge is noted in 2015, where FCFF reached US$ 4,248 million, before retreating to US$ 3,643 million in 2016. The recovery in 2017 returned the value to its 2015 level, followed by further expansion in 2018.
- Analysis of Cash Flow Divergence
- A consistent pattern is observed where FCFF remains higher than the net cash provided by operating activities in every reporting year. This positive variance suggests that the adjustments required to calculate FCFF—specifically the addition of after-tax interest expenses—consistently outweighed the cash outflows allocated to capital expenditures during this timeframe.
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Interest Paid, Net of Tax
Twenty-First Century Fox Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
2 2018 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= 1,209 × 28.00% = 339
Between June 30, 2013, and June 30, 2018, the net cash outflows for interest exhibited a pattern of relative stability, despite significant fluctuations in the effective income tax rate. The net expenditure generally remained within a narrow band, with one notable exception in 2015.
- Effective Income Tax Rate (EITR) Volatility
- The effective income tax rate demonstrated substantial variance over the analyzed period. After rising to 25.00% in 2014, the rate declined sharply to a period low of 13.00% in 2015. This was followed by a consistent upward trend, reaching a peak of 30.00% in 2017, before slightly moderating to 28.00% in 2018.
- Analysis of Cash Paid for Interest, Net of Tax
- Cash payments for interest, net of tax, remained largely consistent, ranging between 840 million and 875 million US dollars for five of the six years. A significant outlier occurred on June 30, 2015, when cash paid for interest spiked to 1,055 million US dollars, representing the highest net outflow in the period.
- Correlation Between Tax Rates and Net Interest Cost
- An inverse correlation is observable between the EITR and the net cash paid for interest. The maximum net interest outflow in 2015 coincides precisely with the minimum effective tax rate of 13.00%, indicating that a reduced tax shield increased the net cash burden. Conversely, the minimum net interest outflow of 840 million US dollars in 2017 aligns with the peak tax rate of 30.00%, where a higher tax shield more effectively offset the gross interest expense.
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Enterprise Value to FCFF Ratio, Current
Twenty-First Century Fox Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 104,923) |
| Free cash flow to the firm (FCFF) | 4,546) |
| Valuation Ratio | |
| EV/FCFF | 23.08 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Alphabet Inc. | 55.75 |
| Comcast Corp. | 7.50 |
| Meta Platforms Inc. | 40.13 |
| Netflix Inc. | 29.67 |
| Walt Disney Co. | 18.68 |
Based on: 10-K (reporting date: 2018-06-30).
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.
Enterprise Value to FCFF Ratio, Historical
Twenty-First Century Fox Inc., 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 (US$ in millions) | |||||||
| Enterprise value (EV)1 | 97,094) | 67,184) | 65,245) | 72,403) | 95,442) | 85,538) | |
| Free cash flow to the firm (FCFF)2 | 4,546) | 4,248) | 3,643) | 4,248) | 3,141) | 3,255) | |
| Valuation Ratio | |||||||
| EV/FCFF3 | 21.36 | 15.82 | 17.91 | 17.04 | 30.39 | 26.28 | |
| Benchmarks | |||||||
| EV/FCFF, Competitors4 | |||||||
| Alphabet Inc. | — | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
3 2018 Calculation
EV/FCFF = EV ÷ FCFF
= 97,094 ÷ 4,546 = 21.36
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 between 2013 and 2018. The ratio experienced a peak in 2014 followed by a period of compression, reaching its lowest point in 2017 before expanding again in 2018.
- Enterprise Value (EV) Trends
- The enterprise value showed substantial fluctuations, increasing from 85,538 million USD in 2013 to 95,442 million USD in 2014. A subsequent decline was observed over the following two years, with the value reaching a low of 65,245 million USD in 2016. A sharp recovery followed, culminating in a period high of 97,094 million USD in 2018.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF demonstrated a general upward trajectory throughout the analyzed period. Starting at 3,255 million USD in 2013, the figure grew to 4,546 million USD by 2018. While there were intermittent fluctuations in 2014 and 2016, the overall trend indicates an improvement in the company's capacity to generate cash flow available to all capital providers.
- EV/FCFF Ratio Dynamics
- The valuation ratio peaked at 30.39 in 2014, reflecting a high market valuation relative to cash flow generation. A significant compression occurred between 2015 and 2017, where the ratio fell to a low of 15.82; this shift was driven by a combination of declining enterprise values and rising free cash flows. In 2018, the ratio expanded to 21.36, as the increase in enterprise value significantly outpaced the growth in FCFF.
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