.Enterprise Value to FCFF (EV/FCFF)
Difficulty: Intermediate
Free Cash Flow to The Firm (FCFF)
Caterpillar Inc., FCFF calculation
USD $ in millions
| 12 months ended | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|---|
| | Profit (loss) attributable to common stockholders | |||||
| | Profit attributable to noncontrolling interests | |||||
| | Net noncash charges | |||||
| | Changes in assets and liabilities, net of acquisitions and divestitures | |||||
| | Net cash provided by operating activities | |||||
| | Interest paid on short-term and long-term borrowings, net of tax1 | |||||
| | Capital expenditures, excluding equipment leased to others | |||||
| | Expenditures for equipment leased to others | |||||
| | Proceeds from disposals of leased assets and property, plant and equipment | |||||
| | 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 Caterpillar Inc.'s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. | Caterpillar Inc.'s FCFF declined from 2015 to 2016 but then increased from 2016 to 2017 not reaching 2015 level. |
Interest Paid, Net of Tax
Caterpillar Inc., 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 | % | % | % | % | % |
| Interest Paid, Net of Tax | ||||||
| | Interest paid on short-term and long-term borrowings, before tax | |||||
| | Less: Interest paid on short-term and long-term borrowings, tax2 | |||||
| | Interest paid on short-term and long-term borrowings, net of tax | |||||
2017 Calculations
2 Interest paid on short-term and long-term borrowings, tax = Interest paid on short-term and long-term borrowings × EITR
= × % =
Enterprise Value to FCFF Ratio, Current
Caterpillar Inc., 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 | |
| Illinois Tool Works Inc. | |
| EV/FCFF, Sector | |
| Industrial Engineering | |
| 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.
Enterprise Value to FCFF Ratio, Historical
Caterpillar Inc., 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 | |||||
| | Free cash flow to the firm (FCFF)2 | |||||
| Ratio | ||||||
| | EV/FCFF3 | |||||
| Benchmarks | ||||||
| EV/FCFF, Competitors | ||||||
| Illinois Tool Works Inc. | ||||||
| EV/FCFF, Sector | ||||||
| Industrial Engineering | ||||||
| EV/FCFF, Industry | ||||||
| Industrials | ||||||
2017 Calculations
3 EV/FCFF = EV ÷ FCFF
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| EV/FCFF | Enterprise value to free cash flow to the firm is whole company valuation indicator. | Caterpillar Inc.'s EV/FCFF ratio increased from 2015 to 2016 but then slightly declined from 2016 to 2017. |
