Free Cash Flow to The Firm (FCFF)

3M Co., FCFF calculation

USD $ in millions

 
12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Net income attributable to 3M 4,858  5,050  4,833  4,956  4,659 
Net income attributable to noncontrolling interest 11  42  62 
Net noncash charges 1,012  1,611  2,369  1,728  1,297 
Changes in assets and liabilities 359  (7) (790) (100) (201)
Net cash provided by operating activities 6,240  6,662  6,420  6,626  5,817 
Cash interest payments, net of tax1 138  139  95  127  122 
Capitalized interest, net of tax2 11  15 
Purchases of property, plant and equipment (PP&E) (1,373) (1,420) (1,461) (1,493) (1,665)
Free cash flow to the firm (FCFF) 5,013  5,388  5,063  5,270  4,289 
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 increased from 2015 to 2016 but then declined significantly from 2016 to 2017.

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Interest Paid, Net of Tax

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

USD $ in millions

 
12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Effective Income Tax Rate (EITR)
EITR1 35.50% 28.30% 29.10% 28.90% 28.10%
Interest Paid, Net of Tax
Cash interest payments, before tax 214  194  134  178  169 
Less: Cash interest payments, tax2 76  55  39  51  47 
Cash interest payments, net of tax 138  139  95  127  122 
Interest Costs Capitalized, Net of Tax
Capitalized interest, before tax 12  10  13  15  21 
Less: Capitalized interest, tax3
Capitalized interest, net of tax 11  15 

2017 Calculations

2 Cash interest payments, tax = Cash interest payments × EITR
= 214 × 35.50% = 76

3 Capitalized interest, tax = Capitalized interest × EITR
= 12 × 35.50% = 4

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Enterprise Value to FCFF Ratio, Current

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

 
Selected Financial Data (USD $ in millions)
Enterprise value (EV) 140,663 
Free cash flow to the firm (FCFF) 5,013 
Ratio
EV/FCFF 28.06
Benchmarks
EV/FCFF, Competitors
Danaher Corp. 27.11
General Electric Co. 15.83
Honeywell International Inc. 23.46
EV/FCFF, Sector
General Industrials 25.56
EV/FCFF, Industry
Industrials 26.98

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.

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Enterprise Value to FCFF Ratio, Historical

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

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 142,670  115,293  100,127  109,717  89,419 
Free cash flow to the firm (FCFF)2 5,013  5,388  5,063  5,270  4,289 
Ratio
EV/FCFF3 28.46 21.40 19.78 20.82 20.85
Benchmarks
EV/FCFF, Competitors
Danaher Corp. 25.94 26.16 21.88 19.11 17.04
General Electric Co. 16.41 11.86 27.52 20.35 21.90
Honeywell International Inc. 23.24 21.27 18.68 19.99 21.05
EV/FCFF, Sector
General Industrials 25.78 15.18 23.62 20.27 20.90
EV/FCFF, Industry
Industrials 26.27 17.92 19.60 19.66 17.36

2017 Calculations

3 EV/FCFF = EV ÷ FCFF
= 142,670 ÷ 5,013 = 28.46

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 2015 to 2016 and from 2016 to 2017.

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