Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Yahoo! Inc., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
The cash flow profile exhibits significant volatility between 2012 and 2016, characterized by alternating periods of substantial deficits and strong surpluses. The fluctuations in both net cash provided by operating activities and free cash flow to the firm (FCFF) indicate a lack of stability in operational cash generation during this five-year period.
- Operating Cash Flow Trends
- Net cash provided by operating activities shifted from a deficit of 281.5 million USD in 2012 to a peak of 1.195 billion USD in 2013. Following a moderate decline to 896.7 million USD in 2014, a severe contraction occurred in 2015, resulting in a negative operating cash flow of 2.383 billion USD. A recovery was observed in 2016, with the figure returning to a positive 1.248 billion USD.
- Free Cash Flow to the Firm (FCFF) Dynamics
- FCFF closely mirrored the volatility of operating activities but demonstrated more pronounced extremes. A deficit of 790.8 million USD in 2012 was followed by positive returns of 934.5 million USD in 2013 and 608.1 million USD in 2014. The most significant downturn occurred in 2015, where FCFF reached a deficit of 2.902 billion USD, before rebounding to 1.258 billion USD in 2016.
- Analysis of Cash Flow Variance
- The variance between operating cash flow and FCFF provides insight into investment activities. In 2012, 2014, and 2015, FCFF was lower than the net cash provided by operating activities, suggesting significant capital expenditures. Conversely, in 2016, FCFF exceeded operating cash flow, which indicates a potential shift toward asset divestitures or other non-operational cash inflows that increased the cash available to the firm's providers of capital relative to its operating performance.
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Interest Paid, Net of Tax
Yahoo! Inc., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 2016 Calculation
EITR = 100 × Income tax expense ÷ EBT
= 100 × -126,228 ÷ -335,691 = 37.60%
2 2016 Calculation
Interest paid, tax = Interest paid × EITR
= 0 × 37.60% = 0
The analysis of the available financial metrics reveals a lack of data for specific interest-related expenditures, while the effective tax environment shows extreme instability.
- Interest Paid, Net of Tax
- There are no recorded values for interest paid, net of tax, for the fiscal years ending December 31, 2012, through December 31, 2016. As a result, no trends, patterns, or calculations regarding the after-tax cost of debt can be established.
- Effective Income Tax Rate (EITR)
- The effective income tax rate exhibited significant volatility over the observed period. The rate fluctuated from 32.93% in 2012 to a low of 10.03% in 2013, rose to 34.90% in 2014, dropped sharply to 2.02% in 2015, and finally increased to 37.60% by 2016. This variance indicates a highly inconsistent tax position throughout the five-year span.
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Enterprise Value to FCFF Ratio, Current
Yahoo! Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 41,958,614) |
| Free cash flow to the firm (FCFF) | 1,258,996) |
| Valuation Ratio | |
| EV/FCFF | 33.33 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Accenture PLC | 13.13 |
| Adobe Inc. | 9.50 |
| AppLovin Corp. | 22.22 |
| Cadence Design Systems Inc. | 50.81 |
| Datadog Inc. | 64.72 |
| International Business Machines Corp. | 21.26 |
| Intuit Inc. | 10.78 |
| Microsoft Corp. | 58.80 |
| Oracle Corp. | — |
| Palantir Technologies Inc. | 174.41 |
| Palo Alto Networks Inc. | 62.27 |
| Salesforce Inc. | 12.89 |
| ServiceNow Inc. | 22.30 |
| Synopsys Inc. | 56.20 |
| Workday Inc. | 16.05 |
Based on: 10-K (reporting date: 2016-12-31).
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
Yahoo! Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | 38,765,313) | 25,544,484) | 34,717,286) | 36,835,581) | 20,060,871) | |
| Free cash flow to the firm (FCFF)2 | 1,258,996) | (2,902,120) | 608,195) | 934,566) | (790,860) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 30.79 | — | 57.08 | 39.41 | — | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Accenture PLC | — | — | — | — | — | |
| Adobe Inc. | — | — | — | — | — | |
| AppLovin Corp. | — | — | — | — | — | |
| Cadence Design Systems Inc. | — | — | — | — | — | |
| Datadog Inc. | — | — | — | — | — | |
| International Business Machines Corp. | — | — | — | — | — | |
| Intuit Inc. | — | — | — | — | — | |
| Microsoft Corp. | — | — | — | — | — | |
| Oracle Corp. | — | — | — | — | — | |
| Palantir Technologies Inc. | — | — | — | — | — | |
| Palo Alto Networks Inc. | — | — | — | — | — | |
| Salesforce Inc. | — | — | — | — | — | |
| ServiceNow Inc. | — | — | — | — | — | |
| Synopsys Inc. | — | — | — | — | — | |
| Workday Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
3 2016 Calculation
EV/FCFF = EV ÷ FCFF
= 38,765,313 ÷ 1,258,996 = 30.79
4 Click competitor name to see calculations.
The financial trajectory between 2012 and 2016 is characterized by significant volatility in both enterprise valuation and cash flow generation. The instability of the Free Cash Flow to the Firm (FCFF) results in an inconsistent Enterprise Value to FCFF (EV/FCFF) ratio, rendering it non-calculable during years of negative cash flow.
- Enterprise Value (EV) Trends
- Enterprise Value experienced substantial fluctuations throughout the analyzed period. Starting at 20.1 billion US dollars in 2012, the value increased sharply to 36.8 billion US dollars by 2013. Following a period of relative stability in 2014 and a significant contraction to 25.5 billion US dollars in 2015, the value rebounded to its peak of 38.8 billion US dollars in 2016.
- Free Cash Flow to the Firm (FCFF) Performance
- The generation of free cash flow was highly inconsistent. Negative FCFF was recorded in 2012 (-790.9 million US dollars) and 2015 (-2.9 billion US dollars), with the latter representing a severe cash outflow. Positive cash flows were achieved in 2013, 2014, and 2016, with the highest positive output occurring in 2016 at approximately 1.26 billion US dollars.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio reflects a fragmented valuation pattern due to the alternating signs of the FCFF. In 2013, the ratio stood at 39.41, which increased significantly to 57.08 in 2014, indicating that the enterprise value remained high while cash flow generation declined. Following a gap in 2015 due to negative cash flows, the ratio compressed to 30.79 in 2016. This represents the lowest positive multiple in the period, suggesting a stronger correlation between the firm's market value and its actual cash flow generation by the end of the sequence.
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