Enterprise Value to FCFF (EV/FCFF)
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AbbVie Inc. pages available for free this week:
- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2012
- Total Asset Turnover since 2012
- Price to Book Value (P/BV) since 2012
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Free Cash Flow to The Firm (FCFF)
AbbVie Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The financial information indicates fluctuations in both cash flows from operating activities and free cash flow to the firm over the five-year period. A general observation is a peak in 2022 followed by a decline in subsequent years.
- Cash Flows from Operating Activities
- Cash flows from operating activities increased from US$22,777 million in 2021 to US$24,943 million in 2022, representing a growth of approximately 9.5%. However, these cash flows decreased to US$22,839 million in 2023, and continued to decline significantly to US$18,806 million in 2024. A slight increase to US$19,030 million is observed in 2025, but remains below the 2021 level.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm mirrored the trend in operating cash flows. FCFF rose from US$24,401 million in 2021 to US$26,486 million in 2022, a rise of approximately 8.5%. A subsequent decrease is noted in 2023, with FCFF falling to US$23,988 million. This downward trend continued into 2024 and 2025, with FCFF reaching US$20,053 million and US$19,743 million respectively. The FCFF in 2025 is approximately 19.3% lower than the value recorded in 2022.
The consistent decline in both operating cash flows and FCFF from 2022 to 2025 suggests potential challenges in maintaining profitability or managing cash expenditures. While 2025 shows a marginal improvement in operating cash flow compared to 2024, the overall trend indicates a need for further investigation into the underlying factors driving these changes.
Interest Paid, Net of Tax
AbbVie Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2 2025 Calculation
Interest paid, net of portion capitalized, tax = Interest paid, net of portion capitalized × EITR
= × =
The analysis reveals a fluctuating pattern in interest expense, net of tax, alongside a significant shift in the effective income tax rate over the five-year period. Interest expense demonstrates a general decreasing trend, though with some variation, while the effective income tax rate exhibits a substantial increase towards the end of the observed timeframe.
- Interest Expense Trend
- Interest expense, net of tax, began at US$2,411 million in 2021. A decrease was observed in 2022, falling to US$2,238 million. This downward trend continued into 2023, with interest expense reaching US$1,926 million. A slight increase occurred in 2024, rising to US$2,221 million, before decreasing again in 2025 to US$1,927 million. Overall, the expense demonstrates volatility but concludes near the lower end of the observed range.
- Effective Income Tax Rate Trend
- The effective income tax rate experienced a notable progression. Starting at 11.10% in 2021, it increased to 12.10% in 2022. A substantial jump was recorded in 2023, reaching 22.00%. The rate remained relatively stable at 21.00% in 2024, before increasing significantly to 35.80% in 2025. This represents a more than threefold increase over the period.
- Relationship between Interest Expense and Effective Income Tax Rate
- The decrease in interest expense from 2021 to 2023 coincided with a moderate increase in the effective income tax rate. However, the substantial increase in the effective income tax rate in 2023 and 2025 did not appear to correlate directly with a corresponding increase in interest expense. The slight increase in interest expense in 2024 occurred during a period of relative stability in the effective income tax rate. Further investigation would be required to determine the underlying drivers of these trends and any potential interdependencies.
The observed changes in both interest expense and the effective income tax rate warrant further scrutiny to understand their impact on overall profitability and financial performance.
Enterprise Value to FCFF Ratio, Current
AbbVie Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Amgen Inc. | |
| Bristol-Myers Squibb Co. | |
| Danaher Corp. | |
| Eli Lilly & Co. | |
| Gilead Sciences Inc. | |
| Johnson & Johnson | |
| Merck & Co. Inc. | |
| Pfizer Inc. | |
| Regeneron Pharmaceuticals Inc. | |
| Thermo Fisher Scientific Inc. | |
| Vertex Pharmaceuticals Inc. | |
| EV/FCFF, Sector | |
| Pharmaceuticals, Biotechnology & Life Sciences | |
| EV/FCFF, Industry | |
| Health Care | |
Based on: 10-K (reporting date: 2025-12-31).
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
AbbVie Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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 | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| EV/FCFF, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| EV/FCFF, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
3 2025 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
The Enterprise Value to Free Cash Flow to the Firm (EV/FCFF) ratio exhibits a notable trend over the observed period. Initially, the ratio demonstrates a decrease followed by a sustained increase. Enterprise Value generally increased throughout the period, while Free Cash Flow to the Firm fluctuated.
- Enterprise Value
- Enterprise Value experienced a modest increase from US$321,636 million in 2021 to US$321,803 million in 2022. Subsequent years show more substantial growth, reaching US$357,064 million in 2023, US$402,112 million in 2024, and culminating in US$459,783 million in 2025. This indicates a consistent expansion in the company’s total value.
- Free Cash Flow to the Firm
- Free Cash Flow to the Firm increased from US$24,401 million in 2021 to US$26,486 million in 2022. However, this was followed by a decline to US$23,988 million in 2023. Further decreases are observed in 2024 and 2025, with values of US$20,053 million and US$19,743 million respectively. This suggests a weakening trend in the company’s cash generation capacity.
- EV/FCFF Ratio
- The EV/FCFF ratio decreased from 13.18 in 2021 to 12.15 in 2022, coinciding with the increase in Free Cash Flow to the Firm. A subsequent rise is observed in 2023, with the ratio reaching 14.89. This upward trend continues, accelerating to 20.05 in 2024 and further increasing to 23.29 in 2025. The increasing ratio suggests that the market is valuing each dollar of free cash flow at a higher multiple over time, potentially reflecting increased investor confidence or changing market conditions, or a decline in the generation of free cash flow relative to the enterprise value.
The divergence between the increasing Enterprise Value and the declining Free Cash Flow to the Firm is the primary driver of the increasing EV/FCFF ratio. This trend warrants further investigation to understand the underlying factors contributing to the changes in cash flow generation.