Enterprise Value to FCFF (EV/FCFF)
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Free Cash Flow to The Firm (FCFF)
Ecolab Inc., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Cash Provided by Operating Activities
- The cash generated from operating activities exhibited an overall upward trend from 2017 to 2019, increasing from approximately $2.09 billion to $2.42 billion. However, there was a notable decline in 2020, with cash provided by operating activities falling to about $1.74 billion. In 2021, cash flow from operations recovered somewhat, rising to approximately $2.06 billion, though it did not return to the peak level seen in 2019.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm steadily increased from 2017 through 2019, climbing from roughly $1.39 billion to $1.78 billion. Similar to the pattern observed in operating cash flow, FCFF declined in 2020 to about $1.48 billion. By 2021, it partially recovered to approximately $1.59 billion, still remaining below the highest value recorded in 2019.
- Overall Observations
- Both operational cash flows and free cash flow demonstrated a growth pattern over the initial three years, peaking in 2019 before experiencing a downturn in 2020. The decline during 2020 likely reflects external factors negatively impacting financial performance in that year. The partial recovery in 2021 suggests some stabilization and improvement but indicates that cash generation had not fully returned to pre-2020 levels by the end of the period analyzed.
Interest Paid, Net of Tax
Ecolab Inc., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2 2021 Calculation
Net interest paid, tax = Net interest paid × EITR
= × =
The analysis of the provided financial data reveals notable trends in the effective income tax rate and net interest paid, net of tax, over the five-year period ending December 31, 2021.
- Effective Income Tax Rate (EITR) Trends
- The effective income tax rate exhibits a decreasing trajectory from 31.9% in 2017 to a low of 15.2% in 2020, indicating a consistent reduction in the tax burden relative to income over these years. In 2021, however, the rate increases slightly to 19.1%, representing a reversal of the downward trend observed in previous years. This fluctuation suggests changes in tax strategy, tax law, or income composition that affected the overall tax rate.
- Net Interest Paid, Net of Tax Trends
- Net interest paid, net of tax, remains relatively stable between 2017 and 2019, with amounts close to $160 million. There is a significant increase in 2020, rising to approximately $222.6 million, followed by a decline in 2021 to about $168.8 million. The sharp rise in 2020 could be attributable to increased borrowing, changes in interest rates, or other financing activities, while the decrease in 2021 suggests a partial reversal or normalization of these factors.
- Overall Insights
- The combination of a declining effective tax rate concurrent with relatively stable interest expenses until 2019 suggests an improvement in tax efficiency or changes in taxable income composition during this period. The spike in net interest paid in 2020, coupled with the lowest tax rate recorded that year, might reflect strategic financial decisions possibly related to the economic environment. The partial return to higher tax rates and lower interest expenses in 2021 indicates some normalization following the anomalies of 2020.
Enterprise Value to FCFF Ratio, Current
Ecolab Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Linde plc | |
| Sherwin-Williams Co. | |
| EV/FCFF, Sector | |
| Chemicals | |
| EV/FCFF, Industry | |
| Materials | |
Based on: 10-K (reporting date: 2021-12-31).
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
Ecolab Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | ||||||
| Free cash flow to the firm (FCFF)2 | ||||||
| Valuation Ratio | ||||||
| EV/FCFF3 | ||||||
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
| EV/FCFF, Sector | ||||||
| Chemicals | ||||||
| EV/FCFF, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
3 2021 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value demonstrates an overall upward trend from 44.98 billion USD in 2017 to a peak of approximately 65.31 billion USD in 2020, followed by a decline to 60.13 billion USD in 2021. This indicates a period of growth over several years, culminating in a high valuation before experiencing some contraction in the most recent year.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm exhibits steady growth from 1.39 billion USD in 2017 to 1.78 billion USD in 2019, followed by a decline in 2020 to 1.48 billion USD and a slight recovery in 2021 to approximately 1.59 billion USD. This reveals some variability in cash generation capabilities, with a notable dip during 2020.
- EV to FCFF Ratio
- The ratio of enterprise value to free cash flow to the firm fluctuates over the period, starting at 32.46 in 2017 and rising to a high of 44.26 in 2020, before decreasing to 37.87 in 2021. The increase to 2020 suggests a higher market valuation relative to cash flow during that year, potentially indicating market optimism or valuation pressures, followed by a partial correction in 2021.