Microsoft Excel LibreOffice Calc

Procter & Gamble Co. (NYSE:PG)

Enterprise Value to FCFF (EV/FCFF)

Intermediate level

Free Cash Flow to The Firm (FCFF)

Procter & Gamble Co., FCFF calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Net earnings attributable to Procter & Gamble 3,897  9,750  15,326  10,508  7,036  11,643 
Net earnings attributable to noncontrolling interests 69  111  85  96  108  142 
Net noncash charges 10,908  1,986  (2,215) 3,191  6,850  3,634 
Change in operating assets and liabilities 368  3,020  (443) 1,640  614  (1,461)
Operating activities 15,242  14,867  12,753  15,435  14,608  13,958 
Cash payments for interest, net of tax1 325  415  398  427  511  539 
Capital expenditures (3,347) (3,717) (3,384) (3,314) (3,736) (3,848)
Proceeds from asset sales 394  269  571  432  4,497  570 
Assets acquired through non-cash capital leases —  —  —  —  —  — 
Free cash flow to the firm (FCFF) 12,614  11,834  10,338  12,980  15,880  11,219 

Based on: 10-K (filing date: 2019-08-06), 10-K (filing date: 2018-08-07), 10-K (filing date: 2017-08-07), 10-K (filing date: 2016-08-09), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

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Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the Procter & Gamble Co.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. Procter & Gamble Co.’s FCFF increased from 2017 to 2018 and from 2018 to 2019.

Interest Paid, Net of Tax

Procter & Gamble Co., interest paid, net of tax calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Effective Income Tax Rate (EITR)
EITR1 34.70% 21.50% 23.10% 25.00% 24.60% 21.40%
Interest Paid, Net of Tax
Cash payments for interest, before tax 497  529  518  569  678  686 
Less: Cash payments for interest, tax2 172  114  120  142  167  147 
Cash payments for interest, net of tax 325  415  398  427  511  539 

Based on: 10-K (filing date: 2019-08-06), 10-K (filing date: 2018-08-07), 10-K (filing date: 2017-08-07), 10-K (filing date: 2016-08-09), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

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2 2019 Calculation
Cash payments for interest, tax = Cash payments for interest × EITR
= 497 × 34.70% = 172

Enterprise Value to FCFF Ratio, Current

Procter & Gamble Co., current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (US$ in millions)
Enterprise value (EV) 305,303 
Free cash flow to the firm (FCFF) 12,614 
Valuation Ratio
EV/FCFF 24.20
Benchmarks
EV/FCFF, Industry
Consumer Goods 18.88

Based on: 10-K (filing date: 2019-08-06).

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

Procter & Gamble Co., historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Selected Financial Data (US$ in millions)
Enterprise value (EV)1 307,076  226,602  251,228  248,416  225,190  245,788 
Free cash flow to the firm (FCFF)2 12,614  11,834  10,338  12,980  15,880  11,219 
Valuation Ratio
EV/FCFF3 24.34 19.15 24.30 19.14 14.18 21.91
Benchmarks
EV/FCFF, Industry
Consumer Goods 21.42 21.88 28.99 28.26 25.53 —

Based on: 10-K (filing date: 2019-08-06), 10-K (filing date: 2018-08-07), 10-K (filing date: 2017-08-07), 10-K (filing date: 2016-08-09), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

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2 See details »

3 2019 Calculation
EV/FCFF = EV ÷ FCFF
= 307,076 ÷ 12,614 = 24.34

Valuation ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. Procter & Gamble Co.’s EV/FCFF ratio decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.