Enterprise Value to FCFF (EV/FCFF)
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- Income Statement
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Reportable Segments
- Price to FCFE (P/FCFE)
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Analysis of Revenues
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Free Cash Flow to The Firm (FCFF)
Marathon Oil Corp., 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).
The financial data reveals fluctuating trends in operating cash flow and free cash flow to the firm over the five-year period.
- Net Cash Provided by Operating Activities
- Operating cash flow increased significantly from 2017 to 2018, rising from 1,988 million US dollars to 3,234 million US dollars, indicating improved cash generation capability during this period. However, in 2019, it experienced a decline to 2,749 million US dollars, followed by a more pronounced drop in 2020 to 1,473 million US dollars. This downward trend in 2020 might reflect the impact of adverse conditions affecting operations. In 2021, there was a substantial recovery, with operating cash flow reaching 3,239 million US dollars, nearly matching the peak level observed in 2018.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow demonstrated an overall growth trend despite some fluctuations. It rose sharply from 78 million US dollars in 2017 to 689 million US dollars in 2018. In 2019, FCFF declined to 412 million US dollars and then stabilized somewhat in 2020 at 378 million US dollars. Notably, 2021 saw a remarkable increase in FCFF, reaching 2,410 million US dollars, which represents a significant improvement and suggests enhanced efficiency in generating free cash flow relative to previous years. This jump may indicate better capital expenditure management or operational improvements.
In summary, the company experienced considerable volatility in its cash flow metrics between 2017 and 2021. While operating cash flow faced a downturn in 2019 and 2020 before rebounding in 2021, free cash flow showed more volatility but concluded with noteworthy growth in the final year. These patterns may suggest responsiveness to external economic factors and operational adjustments over the period analyzed.
Interest Paid, Net of Tax
Marathon Oil Corp., 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 paid, net of amounts capitalized, tax = Interest paid, net of amounts capitalized × EITR
= × =
- Effective Income Tax Rate (EITR)
- The effective income tax rate exhibits significant variability over the analyzed five-year period. In 2017, the rate stands notably high at 83%, indicating an unusually large tax burden relative to pre-tax income in that year. This rate sharply decreases in 2018 to 23%, and then declines slightly further to 21% in 2019, suggesting a considerable reduction in tax expense relative to earnings. The rate drops dramatically to just 1% in 2020, indicating almost negligible tax expenses for that year. In 2021, the rate slightly increases to 6%, yet remains substantially below the levels seen in 2017 and the earlier part of the period.
- Interest Paid, Net of Amounts Capitalized, Net of Tax
- Interest expenses, measured as net cash interest paid, show a general upward trend from 2017 through 2020. Beginning at $64 million in 2017, interest paid rises sharply to $208 million in 2018 and continues to increase slightly to $213 million in 2019. The peak is observed in 2020, with interest paid reaching $248 million. In 2021, this amount decreases moderately to $217 million. The overall pattern suggests increased debt servicing costs or borrowing up through 2020, followed by a partial reduction in the subsequent year.
Enterprise Value to FCFF Ratio, Current
Marathon Oil Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Chevron Corp. | |
| ConocoPhillips | |
| Exxon Mobil Corp. | |
| Occidental Petroleum Corp. | |
| EV/FCFF, Sector | |
| Oil, Gas & Consumable Fuels | |
| EV/FCFF, Industry | |
| Energy | |
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
Marathon Oil Corp., 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 | ||||||
| Free cash flow to the firm (FCFF)2 | ||||||
| Valuation Ratio | ||||||
| EV/FCFF3 | ||||||
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
| EV/FCFF, Sector | ||||||
| Oil, Gas & Consumable Fuels | ||||||
| EV/FCFF, Industry | ||||||
| Energy | ||||||
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)
- Over the five-year period, the enterprise value showed an initial slight decline from 17,830 million USD at the end of 2017 to 17,690 million USD at the end of 2018. This was followed by a more pronounced decrease to 12,800 million USD by the end of 2019. In 2020, EV experienced a modest increase to 13,468 million USD, which was then succeeded by a significant rise to 19,460 million USD at the end of 2021, reaching its highest level within the observed timeframe.
- Free Cash Flow to the Firm (FCFF)
- The FCFF values fluctuated significantly over the period. Starting at a low level of 78 million USD in 2017, there was a substantial increase to 689 million USD in 2018, followed by a decline to 412 million USD in 2019. The downward trend continued modestly to 378 million USD in 2020. However, a strong recovery occurred in 2021, with FCFF surging to 2,410 million USD, marking the peak value across all years analyzed.
- EV to FCFF Ratio (EV/FCFF)
- The EV/FCFF ratio demonstrated a notable downward trend, indicating changes in valuation relative to cash flow generation. The ratio started extremely high at 227.34 in 2017, reflecting relatively low free cash flow compared to enterprise value. It then dropped significantly to 25.68 in 2018 and remained relatively stable around the low 30s in 2019 and 2020 (31.11 and 35.58 respectively). By 2021, the ratio had decreased further to 8.07, suggesting much improved cash flow generation relative to enterprise value and potentially a more favorable valuation.
- Overall Analysis
- The data indicates a period of volatility in both enterprise value and free cash flow with a strong recovery in 2021. The substantial increase in free cash flow in 2021 contributed to a marked reduction in the EV/FCFF ratio, implying enhanced operational performance and a potentially more attractive valuation from an investment perspective. While enterprise value also reached its highest point in 2021, the disproportionate increase in FCFF led to improved financial efficiency measures over the five-year period.