Stock Analysis on Net
Stock Analysis on Net
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, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Net earnings attributable to Procter & Gamble 13,027  3,897  9,750  15,326  10,508  7,036 
Net earnings attributable to noncontrolling interests 76  69  111  85  96  108 
Net noncash charges 3,090  10,908  1,986  (2,215) 3,191  6,850 
Change in operating assets and liabilities 1,210  368  3,020  (443) 1,640  614 
Operating activities 17,403  15,242  14,867  12,753  15,435  14,608 
Cash payments for interest, net of tax1 359  325  415  398  427  511 
Capital expenditures (3,073) (3,347) (3,717) (3,384) (3,314) (3,736)
Proceeds from asset sales 30  394  269  571  432  4,497 
Assets acquired through non-cash finance leases —  —  —  —  —  — 
Free cash flow to the firm (FCFF) 14,719  12,614  11,834  10,338  12,980  15,880 

Based on: 10-K (filing date: 2020-08-06), 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).

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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 2018 to 2019 and from 2019 to 2020.

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, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Effective Income Tax Rate (EITR)
EITR1 17.20% 34.70% 21.50% 23.10% 25.00% 24.60%
Interest Paid, Net of Tax
Cash payments for interest, before tax 434  497  529  518  569  678 
Less: Cash payments for interest, tax2 75  172  114  120  142  167 
Cash payments for interest, net of tax 359  325  415  398  427  511 

Based on: 10-K (filing date: 2020-08-06), 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).

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2 2020 Calculation
Cash payments for interest, tax = Cash payments for interest × EITR
= 434 × 17.20% = 75

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) 361,928 
Free cash flow to the firm (FCFF) 14,719 
Valuation Ratio
EV/FCFF 24.59
Benchmarks
EV/FCFF, Industry
Consumer Goods 24.70

Based on: 10-K (filing date: 2020-08-06).

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, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Selected Financial Data (US$ in millions)
Enterprise value (EV)1 349,722  307,076  226,602  251,228  248,416  225,190 
Free cash flow to the firm (FCFF)2 14,719  12,614  11,834  10,338  12,980  15,880 
Valuation Ratio
EV/FCFF3 23.76 24.34 19.15 24.30 19.14 14.18
Benchmarks
EV/FCFF, Industry
Consumer Goods — 23.97 21.93 28.83 25.53 21.96

Based on: 10-K (filing date: 2020-08-06), 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).

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3 2020 Calculation
EV/FCFF = EV ÷ FCFF
= 349,722 ÷ 14,719 = 23.76

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 increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.