Enterprise Value to FCFF (EV/FCFF)
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Workday Inc. pages available for free this week:
- Balance Sheet: Assets
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Net Profit Margin since 2013
- Operating Profit Margin since 2013
- Current Ratio since 2013
- Price to Earnings (P/E) since 2013
- Price to Operating Profit (P/OP) since 2013
- Price to Sales (P/S) since 2013
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Free Cash Flow to The Firm (FCFF)
Workday Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-31).
- Net Cash Provided by Operating Activities
- There is a consistent upward trend in net cash provided by operating activities over the six-year period. Beginning at $865 million in 2020, the amount increases steadily each year, reaching $2,461 million by 2025. This reflects a nearly threefold increase, indicating improved operational cash generation and potentially stronger core business performance.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm also shows significant growth across the same timeline. Starting at $524 million in 2020, FCFF more than quadruples to $2,280 million in 2025. The growth pattern is generally consistent, with the most notable increase occurring between 2023 and 2024, where FCFF jumps from $1,340 million to $1,994 million, suggesting a notable improvement in cash available after capital expenditures.
- Comparative Analysis
- Both operating cash flow and FCFF exhibit positive trajectories, implying healthy operational efficiency and prudent investment decisions. The gap between net cash from operations and free cash flow widens slightly over time but remains proportional, reflecting stable capital spending relative to operating cash inflows. Overall, these trends suggest that the firm’s liquidity and capacity to generate free cash flow are strengthening year over year.
Interest Paid, Net of Tax
Workday Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-31).
2 2025 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= × =
- Effective Income Tax Rate (EITR)
- The effective income tax rate experienced a significant increase from 0.4% in 2020 to 21% in 2021, where it remained stable through 2024. In the most recent period ending January 31, 2025, there is a noticeable decrease to 17.5%. This pattern suggests a major tax rate adjustment or change in tax policy occurring after 2020, followed by a period of consistency before a recent reduction.
- Cash Paid for Interest, Net of Tax
- The cash paid for interest, net of tax, showed a steady upward trend across the periods analyzed. Starting from a relatively low base of US$3 million in 2020, the amount increased moderately to US$11 million in 2021 and 2022. Subsequently, there was a more pronounced rise to US$47 million in 2023, followed by further increases to US$87 million in 2024 and US$91 million in 2025. This escalating pattern indicates growing interest expenses over time, potentially due to increased borrowing or higher interest rates.
Enterprise Value to FCFF Ratio, Current
Workday Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Accenture PLC | |
| Adobe Inc. | |
| Cadence Design Systems Inc. | |
| CrowdStrike Holdings Inc. | |
| Fair Isaac Corp. | |
| International Business Machines Corp. | |
| Intuit Inc. | |
| Microsoft Corp. | |
| Oracle Corp. | |
| Palantir Technologies Inc. | |
| Palo Alto Networks Inc. | |
| Salesforce Inc. | |
| ServiceNow Inc. | |
| Synopsys Inc. | |
| EV/FCFF, Sector | |
| Software & Services | |
| EV/FCFF, Industry | |
| Information Technology | |
Based on: 10-K (reporting date: 2025-01-31).
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
Workday Inc., historical EV/FCFF calculation, comparison to benchmarks
| Jan 31, 2025 | Jan 31, 2024 | Jan 31, 2023 | Jan 31, 2022 | Jan 31, 2021 | Jan 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Enterprise value (EV)1 | |||||||
| Free cash flow to the firm (FCFF)2 | |||||||
| Valuation Ratio | |||||||
| EV/FCFF3 | |||||||
| Benchmarks | |||||||
| EV/FCFF, Competitors4 | |||||||
| Accenture PLC | |||||||
| Adobe Inc. | |||||||
| Cadence Design Systems Inc. | |||||||
| CrowdStrike Holdings Inc. | |||||||
| Fair Isaac Corp. | |||||||
| International Business Machines Corp. | |||||||
| Intuit Inc. | |||||||
| Microsoft Corp. | |||||||
| Oracle Corp. | |||||||
| Palantir Technologies Inc. | |||||||
| Palo Alto Networks Inc. | |||||||
| Salesforce Inc. | |||||||
| ServiceNow Inc. | |||||||
| Synopsys Inc. | |||||||
| EV/FCFF, Sector | |||||||
| Software & Services | |||||||
| EV/FCFF, Industry | |||||||
| Information Technology | |||||||
Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-31).
3 2025 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited variability across the observed periods. It increased notably from 37,960 million USD in early 2020 to a peak of 58,514 million USD in early 2021. Subsequently, there was a decline to 44,751 million USD by early 2023, followed by another rise reaching 64,947 million USD in early 2024. The value slightly decreased thereafter to 59,586 million USD by early 2025. Overall, the EV demonstrated fluctuations with a general upward trajectory, albeit with some pronounced intermediate dips.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm showed a consistent and significant upward trend throughout the period. Starting at 524 million USD in early 2020, FCFF more than quadrupled to 2,280 million USD by early 2025. This steady increase indicates improving operational cash generation and suggests strengthening financial health over the years.
- EV to FCFF Ratio (EV/FCFF)
- The EV/FCFF ratio steadily declined over the entire period, from a high of 72.44 in 2020 to 26.14 in 2025. This downward trend suggests that the company's valuation relative to its free cash flow has become more attractive or less expensive over time. The decrease in the ratio primarily reflects the faster growth in free cash flow compared to enterprise value, implying improved cash flow efficiency or market valuation adjustments.
- Summary
- In summary, the financial data reflects a company experiencing profitable cash flow growth, which contrasts with a fluctuating enterprise value. The consistent rise in free cash flow and the declining EV/FCFF ratio reveal an improving capacity to generate cash relative to valuation, pointing toward enhanced financial performance and potentially undervalued market positioning in recent years.