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Ford Motor Co. (F)


Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate


Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)

Ford Motor Co., EBITDA calculation

USD $ in millions

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12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net income attributable to Ford Motor Company 3,677  7,602  4,596  7,373  3,187 
Add: Net income attributable to noncontrolling interest 18  26  11  (2) (1)
Add: Income tax expense 650  520  2,189  2,881  1,156 
Earnings before tax (EBT) 4,345  8,148  6,796  10,252  4,342 
Add: Interest expense 1,228  1,133  894  773  797 
Earnings before interest and tax (EBIT) 5,573  9,281  7,690  11,025  5,139 
Add: Depreciation and tooling amortization 9,280  9,122  9,023  7,993  7,385 
Add: Other amortization (972) (669) (306) (27) 38 
Earnings before interest, tax, depreciation and amortization (EBITDA) 13,881  17,734  16,407  18,991  12,562 

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-13).

Item Description The company
EBITDA To calculate EBITDA analysts start with net earnings. To that earnings number, interest, taxes, depreciation, and amortization are added. EBITDA as a pre-interest number is a flow to all providers of capital. Ford Motor Co.’s EBITDA increased from 2016 to 2017 but then declined significantly from 2017 to 2018.

Enterprise Value to EBITDA Ratio, Current

Ford Motor Co., current EV/EBITDA calculation, comparison to benchmarks

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Selected Financial Data (USD $ in millions)
Enterprise value (EV) 106,995 
Earnings before interest, tax, depreciation and amortization (EBITDA) 13,881 
Ratio
EV/EBITDA 7.71
Benchmarks
EV/EBITDA, Competitors
General Motors Co. 5.88
EV/EBITDA, Sector
Automobiles & Parts 6.57
EV/EBITDA, Industry
Consumer Goods 13.66

Based on: 10-K (filing date: 2019-02-21).

If company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.

Otherwise, if company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.


Enterprise Value to EBITDA Ratio, Historical

Ford Motor Co., historical EV/EBITDA calculation, comparison to benchmarks

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 100,596  104,620  107,096  96,895  152,530 
Earnings before interest, tax, depreciation and amortization (EBITDA)2 13,881  17,734  16,407  18,991  12,562 
Ratio
EV/EBITDA3 7.25 5.90 6.53 5.10 12.14
Benchmarks
EV/EBITDA, Competitors
General Motors Co. 6.05 5.28 4.97 5.24 6.47
EV/EBITDA, Sector
Automobiles & Parts 6.50 5.54 5.62 5.17 9.39
EV/EBITDA, Industry
Consumer Goods 12.43 12.30 11.84 12.68 13.08

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-13).

2018 Calculations

3 EV/EBITDA = EV ÷ EBITDA
= 100,596 ÷ 13,881 = 7.25

Ratio Description The company
EV/EBITDA EV/EBITDA is a valuation indicator for the overall company rather than common stock. Ford Motor Co.’s EV/EBITDA ratio declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.