Johnson & Johnson, FCFF calculation

US$ in millions

12 months ended:	Dec 29, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Net earnings	14,066)	35,153)	17,941)	20,878)	14,714)
Net noncash charges	8,363)	(14,869)	7,264)	6,770)	6,132)
Changes in assets and liabilities, net of effects from acquisitions and divestitures	1,837)	2,507)	(4,011)	(4,238)	2,690)
Net cash flows from operating activities	24,266)	22,791)	21,194)	23,410)	23,536)
Cash paid during the year for interest, net of amount capitalized, net of tax¹	1,611)	1,563)	771)	863)	750)
Interest expense capitalized, net of tax²	67)	62)	40)	45)	56)
Additions to property, plant and equipment	(4,424)	(4,543)	(4,009)	(3,652)	(3,347)
Free cash flow to the firm (FCFF)	21,520)	19,873)	17,996)	20,666)	20,995)

Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

^{1, 2} See details »

Net cash flows from operating activities: The net cash flows from operating activities exhibit a fluctuating pattern over the analyzed period. Starting at $23,536 million in 2020, there was a marginal decrease to $23,410 million in 2021. This decline became more pronounced in 2022, reducing to $21,194 million. However, the subsequent years indicate a recovery trend, with cash flows increasing to $22,791 million in 2023 and further rising to $24,266 million in 2024, surpassing the 2020 level.
Free cash flow to the firm (FCFF): The free cash flow to the firm follows a similar trajectory to the net operating cash flows but consistently remains lower in value. Beginning at $20,995 million in 2020, FCFF decreased slightly to $20,666 million in 2021 and then experienced a more significant drop to $17,996 million in 2022. Following this nadir, FCFF improved to $19,873 million in 2023 and continued to rise to $21,520 million in 2024, yet it had not fully returned to the 2020 level as of the last data point.
Overall Financial Cash Flow Trend: Both financial metrics reflect sensitivity to operational and capital expenditure variations within the firm. The dip in 2022 may suggest increased operational challenges or higher capital spending during that year, impacting free cash flow more notably than operating cash flow alone. The recovery observed in the last two years suggests an improvement in operational efficiency or reduced capital expenditures, contributing to healthier liquidity and cash generation capacity.

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Johnson & Johnson, interest paid, net of tax calculation

US$ in millions

12 months ended:	Dec 29, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Effective Income Tax Rate (EITR)
EITR¹	15.70%	11.50%	17.40%	8.30%	10.80%
Interest Paid, Net of Tax
Cash paid during the year for interest, net of amount capitalized, before tax	1,911)	1,766)	933)	941)	841)
Less: Cash paid during the year for interest, net of amount capitalized, tax²	300)	203)	162)	78)	91)
Cash paid during the year for interest, net of amount capitalized, net of tax	1,611)	1,563)	771)	863)	750)
Interest Costs Capitalized, Net of Tax
Interest expense capitalized, before tax	79)	70)	49)	49)	63)
Less: Interest expense capitalized, tax³	12)	8)	9)	4)	7)
Interest expense capitalized, net of tax	67)	62)	40)	45)	56)

Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

¹ See details »

² 2024 Calculation
Cash paid during the year for interest, net of amount capitalized, tax = Cash paid during the year for interest, net of amount capitalized × EITR
= 1,911 × 15.70% = 300

³ 2024 Calculation
Interest expense capitalized, tax = Interest expense capitalized × EITR
= 79 × 15.70% = 12

Effective income tax rate (EITR): The effective income tax rate experienced fluctuations over the five-year period. Starting at 10.8% in 2020, it decreased to a low of 8.3% in 2021. However, it rose sharply to 17.4% in 2022 before declining again to 11.5% in 2023. In 2024, the rate increased to 15.7%. This indicates variability in tax expenses, which could be influenced by changes in tax regulations, income composition, or geographic earnings distribution.
Cash paid during the year for interest, net of amount capitalized, net of tax: Cash outflows for interest payments showed a generally increasing trend over the period. Beginning at $750 million in 2020, the amount rose modestly to $863 million in 2021, then dipped slightly to $771 million in 2022. From 2022 onward, there was a significant increase, with cash paid for interest reaching $1,563 million in 2023 and further rising slightly to $1,611 million in 2024. This substantial increase in recent years suggests higher borrowing costs or increased debt levels during this period.
Interest expense capitalized, net of tax: Interest expense capitalized remained relatively stable with minor fluctuations across the years. Initially at $56 million in 2020, it decreased slightly to $45 million in 2021 and further to $40 million in 2022. In the subsequent years, the figure increased to $62 million in 2023 and $67 million in 2024. The trend reflects small rises in capitalized interest costs in the latter years, which may indicate ongoing investments in qualifying assets or changes in accounting treatment.

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Johnson & Johnson, current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (US$ in millions)
Enterprise value (EV)	378,509)
Free cash flow to the firm (FCFF)	21,520)
Valuation Ratio
EV/FCFF	17.59
Benchmarks
EV/FCFF, Competitors¹
AbbVie Inc.	19.40
Amgen Inc.	14.93
Bristol-Myers Squibb Co.	8.71
Danaher Corp.	28.08
Eli Lilly & Co.	184.14
Gilead Sciences Inc.	13.53
Merck & Co. Inc.	11.63
Pfizer Inc.	14.53
Regeneron Pharmaceuticals Inc.	13.36
Thermo Fisher Scientific Inc.	20.66
Vertex Pharmaceuticals Inc.	—
EV/FCFF, Sector
Pharmaceuticals, Biotechnology & Life Sciences	21.71
EV/FCFF, Industry
Health Care	21.45

Based on: 10-K (reporting date: 2024-12-29).

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.

Johnson & Johnson, historical EV/FCFF calculation, comparison to benchmarks

	Dec 29, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Selected Financial Data (US$ in millions)
Enterprise value (EV)¹	390,710)	383,498)	428,242)	439,101)	435,585)
Free cash flow to the firm (FCFF)²	21,520)	19,873)	17,996)	20,666)	20,995)
Valuation Ratio
EV/FCFF³	18.16	19.30	23.80	21.25	20.75
Benchmarks
EV/FCFF, Competitors⁴
AbbVie Inc.	20.05	14.89	12.15	13.18	13.95
Amgen Inc.	15.35	22.22	16.01	15.82	14.51
Bristol-Myers Squibb Co.	9.94	9.14	13.87	10.52	11.63
Danaher Corp.	28.93	36.34	25.74	28.25	30.66
Eli Lilly & Co.	200.93	655.33	59.14	38.37	39.01
Gilead Sciences Inc.	14.50	13.41	13.58	8.42	13.60
Merck & Co. Inc.	13.24	37.84	19.09	23.27	34.12
Pfizer Inc.	15.33	32.24	9.15	8.40	21.74
Regeneron Pharmaceuticals Inc.	19.30	23.99	17.96	9.81	25.74
Thermo Fisher Scientific Inc.	26.13	28.85	31.61	33.14	26.14
Vertex Pharmaceuticals Inc.	—	29.45	16.68	22.47	16.00
EV/FCFF, Sector
Pharmaceuticals, Biotechnology & Life Sciences	23.57	27.24	17.95	16.12	19.74
EV/FCFF, Industry
Health Care	23.63	24.95	17.94	17.18	18.55

Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

¹ See details »

² See details »

³ 2024 Calculation
EV/FCFF = EV ÷ FCFF
= 390,710 ÷ 21,520 = 18.16

⁴ Click competitor name to see calculations.

Enterprise Value (EV): The enterprise value demonstrates a general declining trend from 2020 to 2023, decreasing from approximately $435.6 billion to about $383.5 billion. This represents a reduction of around 12% over the four-year period. In 2024, there is a slight recovery to roughly $390.7 billion, though the value remains below the levels observed in 2020 and 2021.
Free Cash Flow to the Firm (FCFF): The free cash flow to the firm exhibits a fluctuating pattern. Starting from about $21.0 billion in 2020, it slightly declines to $20.7 billion in 2021 and then further decreases to a low of approximately $18.0 billion in 2022. Subsequently, a recovery trend is observed with FCFF increasing to nearly $19.9 billion in 2023 and then rising again to $21.5 billion in 2024, surpassing the initial 2020 level.
EV to FCFF Ratio: This valuation ratio shows notable variation over the observed periods. It starts at 20.75 in 2020, increases slightly to 21.25 in 2021, and peaks at 23.8 in 2022, corresponding with the lowest FCFF and a moderately high EV. From 2022 onwards, the ratio decreases significantly, falling to 19.3 in 2023 and further to 18.16 in 2024. The decline in the ratio suggests improved relative valuation of the firm’s free cash flows over the more recent years.
Overall Insights: The data reveals that while the company experienced a decline in enterprise value through the majority of the period, its free cash flow showed resilience by rebounding after a dip in 2022. The falling EV/FCFF ratio in the final two years indicates a potential increase in the attractiveness of the company's valuation relative to its cash generation capability. This combination of rising cash flow and decreasing valuation multiples could reflect market adjustments or operational improvements that enhance the firm's fundamental outlook.

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Johnson & Johnson (NYSE:JNJ)

Enterprise Value to FCFF (EV/FCFF)

Free Cash Flow to The Firm (FCFF)

Interest Paid, Net of Tax

Enterprise Value to FCFF Ratio, Current

Enterprise Value to FCFF Ratio, Historical