Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
HCA Healthcare Inc., FCFF calculation
US$ in millions
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).
Between 2017 and 2021, a general upward trajectory in cash generation was observed, peaking in 2020 before experiencing a moderate decline in 2021. Both net cash provided by operating activities and free cash flow to the firm demonstrated substantial growth over the first four years of the period analyzed.
- Operating Cash Flow Trends
- Net cash provided by operating activities increased consistently from US$ 5,426 million in 2017 to a peak of US$ 9,232 million in 2020. This reflects a total increase of approximately 70% over four years. A slight contraction occurred in 2021, with values receding to US$ 8,959 million.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF exhibited more pronounced volatility than operating cash flow. From 2017 to 2019, growth was steady, rising from US$ 3,608 million to US$ 4,956 million. A substantial surge occurred in 2020, where FCFF reached its peak at US$ 7,695 million, followed by a decline of approximately 14.7% to US$ 6,561 million in 2021.
- Cash Flow Conversion and Capital Allocation
- The relationship between operating cash flow and FCFF indicates varying levels of capital investment. In 2020, the conversion of operating cash flow to FCFF reached its highest efficiency, suggesting a significant reduction in capital expenditures relative to cash generation during that period. The decline in FCFF in 2021, which was more severe than the slight dip in operating cash flow, indicates an increase in capital outflows or investments during the final year of the period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Interest Paid, Net of Tax
HCA Healthcare Inc., interest paid, net of tax calculation
US$ in millions
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
Interest payments, tax = Interest payments × EITR
= 1,502 × 21.50% = 323
Analysis of the financial expenditures from 2017 to 2021 reveals a bell-shaped trajectory in net interest obligations, coinciding with a structural shift in the effective income tax rate.
- Interest Payment Trends
- Net interest payments exhibited an upward trend during the initial three years of the observed period, increasing from 1,197 million US dollars in 2017 to a peak of 1,512 million US dollars in 2019. Following this peak, a consistent decline was recorded, with payments falling to 1,298 million US dollars in 2020 and further to 1,179 million US dollars by December 31, 2021. This represents a total reduction of approximately 22% from the 2019 peak.
- Effective Income Tax Rate (EITR) Dynamics
- A significant reduction in the EITR is observed between 2017 and 2018, where the rate decreased from 29.60% to 19.30%. For the remainder of the period, the rate remained relatively stable, fluctuating within a narrow range between 19.20% and 21.50%.
- Correlation and Financial Implications
- The divergence between the stabilization of the tax rate and the volatility of interest payments indicates that the fluctuations in net interest costs were primarily driven by changes in gross debt levels or financing terms rather than tax-shield variances. By 2021, the net interest cost returned to a level slightly below that of 2017, despite the effective tax rate remaining significantly lower than the 29.60% recorded at the start of the period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Enterprise Value to FCFF Ratio, Current
HCA Healthcare Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 99,463) |
| Free cash flow to the firm (FCFF) | 6,561) |
| Valuation Ratio | |
| EV/FCFF | 15.16 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Abbott Laboratories | 24.11 |
| Elevance Health Inc. | 19.90 |
| Intuitive Surgical Inc. | 57.79 |
| Medtronic PLC | 23.66 |
| UnitedHealth Group Inc. | 21.52 |
| EV/FCFF, Sector | |
| Health Care Equipment & Services | 20.79 |
| EV/FCFF, Industry | |
| Health Care | 27.52 |
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
HCA Healthcare 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 millions) | ||||||
| Enterprise value (EV)1 | 109,659) | 91,822) | 85,468) | 82,972) | 69,421) | |
| Free cash flow to the firm (FCFF)2 | 6,561) | 7,695) | 4,956) | 4,595) | 3,608) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 16.71 | 11.93 | 17.25 | 18.06 | 19.24 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Abbott Laboratories | 23.47 | — | — | — | — | |
| Elevance Health Inc. | 12.74 | — | — | — | — | |
| Intuitive Surgical Inc. | 56.01 | — | — | — | — | |
| Medtronic PLC | 33.84 | — | — | — | — | |
| UnitedHealth Group Inc. | 22.21 | — | — | — | — | |
| EV/FCFF, Sector | ||||||
| Health Care Equipment & Services | 23.51 | — | — | — | — | |
| EV/FCFF, Industry | ||||||
| Health Care | 17.80 | — | — | — | — | |
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
= 109,659 ÷ 6,561 = 16.71
4 Click competitor name to see calculations.
The financial trajectory from 2017 to 2021 is characterized by a consistent expansion in enterprise value and a general, albeit volatile, increase in free cash flow to the firm. While the total valuation of the entity grew steadily throughout the period, the efficiency of cash flow generation relative to that valuation fluctuated significantly.
- Enterprise Value (EV) Trends
- A continuous upward trend is observed in enterprise value, which rose from 69,421 million in 2017 to 109,659 million by 2021. This represents a sustained increase in the market's valuation of the company's total capital structure over the five-year period.
- Free Cash Flow to the Firm (FCFF) Dynamics
- Free cash flow to the firm exhibited overall growth, starting at 3,608 million in 2017 and reaching a peak of 7,695 million in 2020. However, a contraction occurred in 2021, with the figure declining to 6,561 million, despite the continued growth in overall enterprise value.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio experienced a steady decline from 19.24 in 2017 to a minimum of 11.93 in 2020, indicating that cash flow growth outpaced the increase in enterprise value during this interval. This trend reversed sharply in 2021, with the ratio ascending to 16.71, driven by the simultaneous increase in enterprise value and the reduction in free cash flow.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?