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3M Co. (MMM)

Enterprise Value to FCFF (EV/FCFF)

Difficulty: Intermediate

3M Co., FCFF calculation

USD $ in millions

	12 months ended	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Net income attributable to 3M
	Net income attributable to noncontrolling interest
	Net noncash charges
	Changes in assets and liabilities
	Net cash provided by operating activities
	Cash interest payments, net of tax¹
	Capitalized interest, net of tax²
	Purchases of property, plant and equipment (PP&E)
	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 3M Co.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	3M Co.’s FCFF declined from 2016 to 2017 but then slightly increased from 2017 to 2018.

3M Co., interest paid, net of tax calculation

USD $ in millions

	12 months ended	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Effective Income Tax Rate (EITR)

	EITR¹
	Interest Paid, Net of Tax
	Cash interest payments, before tax
	Less: Cash interest payments, tax²
	Cash interest payments, net of tax
	Interest Costs Capitalized, Net of Tax
	Capitalized interest, before tax
	Less: Capitalized interest, tax³
	Capitalized interest, net of tax

2018 Calculations

² Cash interest payments, tax = Cash interest payments × EITR
= hidden × hidden = hidden

³ Capitalized interest, tax = Capitalized interest × EITR
= hidden × hidden = hidden

3M Co., 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
Danaher Corp.
General Electric Co.
Honeywell International Inc.
EV/FCFF, Sector
General Industrials
EV/FCFF, Industry
Industrials

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.

3M Co., historical EV/FCFF calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	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
	Danaher Corp.
	General Electric Co.
	Honeywell International Inc.
	EV/FCFF, Sector
	General Industrials
	EV/FCFF, Industry
	Industrials

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.	3M Co.’s EV/FCFF ratio increased from 2016 to 2017 but then slightly declined from 2017 to 2018 not reaching 2016 level.

	3M Co.	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