Enterprise Value to FCFF (EV/FCFF)
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Carrier Global Corp. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Operating Profit Margin since 2020
- Return on Assets (ROA) since 2020
- Price to Earnings (P/E) since 2020
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Free Cash Flow to The Firm (FCFF)
Carrier Global Corp., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The analysis of cash flow data over the three-year period reveals certain fluctuations and trends in the company’s financial operations.
- Net Cash Flows Provided by Operating Activities
- The net cash flows provided by operating activities increased significantly from 1692 million US dollars in 2020 to 2237 million US dollars in 2021. This upward movement suggests an improvement in core operational efficiency or enhanced cash collection from operating activities during that year. However, in 2022, the figure declined to 1743 million US dollars, indicating a reduction in operating cash inflows compared to 2021 but still remaining slightly higher than the 2020 level. This decline could point to operational challenges or changes in working capital requirements impacting liquidity.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm exhibited a similar pattern to operating cash flows. It rose from 1518 million US dollars in 2020 to 2118 million US dollars in 2021, a substantial increase reflecting improved cash generation after capital expenditures. In 2022, FCFF dropped to 1638 million US dollars, decreasing from the previous year but still above the initial 2020 figure. This suggests that while the company generated less free cash flow in 2022 compared to 2021, it maintained a positive free cash flow position over the period under review.
Overall, the data indicates that the company experienced a peak in cash generation activities in 2021, followed by a notable decline in 2022. Despite this reduction, the cash flows both from operating activities and free cash flow remain at levels higher than those reported for 2020, which can be interpreted as an overall positive trend with some recent moderation. The decline in 2022 may warrant further investigation into the underlying causes, such as changes in operational efficiency, capital spending, or external economic factors affecting cash flow generation.
Interest Paid, Net of Tax
Carrier Global Corp., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2 2022 Calculation
Interest paid, net of amounts capitalized, tax = Interest paid, net of amounts capitalized × EITR
= × =
- Effective Income Tax Rate
- The effective income tax rate shows a declining trend over the three-year period. Starting at 29.7% in 2020, it marginally decreased to 29.1% in 2021 before sharply dropping to 16.5% in 2022. This significant reduction in 2022 suggests a notable change in tax strategy, tax benefits utilization, or legislative impacts affecting the company's tax expense.
- Interest Paid, Net of Amounts Capitalized, Net of Tax
- The interest paid, measured in US$ millions, has increased consistently over the period. It rose from $138 million in 2020 to $225 million in 2021, and further to $248 million in 2022. This upward trajectory may indicate higher borrowing levels, increased interest rates on existing debt, or changes in capital structure leading to higher interest expenses despite capitalization adjustments.
Enterprise Value to FCFF Ratio, Current
Carrier Global Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Boeing Co. | |
| Caterpillar Inc. | |
| Eaton Corp. plc | |
| GE Aerospace | |
| Honeywell International Inc. | |
| Lockheed Martin Corp. | |
| RTX Corp. | |
| EV/FCFF, Sector | |
| Capital Goods | |
| EV/FCFF, Industry | |
| Industrials | |
Based on: 10-K (reporting date: 2022-12-31).
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
Carrier Global Corp., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 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 | ||||
| Boeing Co. | ||||
| Caterpillar Inc. | ||||
| Eaton Corp. plc | ||||
| GE Aerospace | ||||
| Honeywell International Inc. | ||||
| Lockheed Martin Corp. | ||||
| RTX Corp. | ||||
| EV/FCFF, Sector | ||||
| Capital Goods | ||||
| EV/FCFF, Industry | ||||
| Industrials | ||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
3 2022 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited an overall increase from 39,816 million US dollars at the end of 2020 to 46,441 million in 2021, reflecting a growth trend during this period. However, in 2022, the enterprise value decreased to 42,670 million US dollars, indicating a decline following the previous year's increase.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm increased significantly from 1,518 million US dollars in 2020 to 2,118 million in 2021, showing improved cash generation. In 2022, FCFF declined to 1,638 million US dollars, suggesting a reduction in available cash flow after the strong performance in 2021.
- EV to FCFF Ratio
- The EV/FCFF ratio decreased from 26.23 in 2020 to 21.93 in 2021, indicating enhanced valuation relative to cash flow, which may suggest the company became more attractive or was better valued based on its cash-generating capability. However, in 2022, this ratio rose again to 26.05, reflecting a less favorable valuation in relation to the free cash flow, potentially due to the decline in FCFF or changes in enterprise value.