Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
RTX Corp., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The financial information indicates fluctuations in both net cash flows from operating activities and free cash flow to the firm (FCFF) over the five-year period. A general upward trend is apparent when considering the period as a whole, though interim declines are observed.
- Net Cash Flows from Operating Activities
- Net cash flows from operating activities demonstrate a relatively stable pattern between 2021 and 2023, ranging from US$7,142 million to US$7,883 million. A decrease is noted in 2024, falling to US$7,159 million, before a substantial increase to US$10,567 million in 2025. This final year represents the highest value within the observed timeframe.
- Free Cash Flow to the Firm (FCFF)
- FCFF experienced a slight decline from US$6,134 million in 2021 to US$5,996 million in 2022. A subsequent recovery is seen in 2023, with FCFF reaching US$6,758 million. This upward momentum was interrupted in 2024, as FCFF decreased to US$6,105 million. Similar to operating cash flows, 2025 shows a significant increase in FCFF, reaching US$9,443 million, representing the highest value in the period.
The correlation between net cash flows from operating activities and FCFF is strong. The increase in operating cash flow in 2025 directly corresponds to the largest increase in FCFF. The observed fluctuations suggest potential sensitivity to underlying business conditions or strategic financial decisions. The substantial increases in both metrics during 2025 warrant further investigation to determine the driving factors behind this performance.
- FCFF Trend
- Overall, FCFF demonstrates a positive trend from 2021 to 2025, despite interim volatility. The compound annual growth rate (CAGR) over the five-year period is approximately 8.8%, indicating a healthy expansion of cash available to all investors.
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Interest Paid, Net of Tax
RTX Corp., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2 2025 Calculation
Interest paid, net of amounts capitalized, tax = Interest paid, net of amounts capitalized × EITR
= 1,858 × 19.10% = 355
The analysis reveals a fluctuating relationship between interest expense, net of tax, and the effective income tax rate over the five-year period. Interest paid, net of tax, generally increased, while the effective income tax rate exhibited volatility.
- Interest Paid, Net of Tax
- Interest paid, net of tax, demonstrated an initial decrease from $1,126 million in 2021 to $1,116 million in 2022. Subsequently, a notable increase occurred, rising to $1,290 million in 2023 and further to $1,571 million in 2024. A slight decrease was observed in 2025, with interest paid, net of tax, reported at $1,503 million. This suggests a growing interest burden, particularly between 2022 and 2024, followed by a modest stabilization.
- Effective Income Tax Rate
- The effective income tax rate experienced a significant decline from 15.90% in 2021 to 11.60% in 2022. It then remained relatively stable at 11.90% in 2023 before increasing substantially to 19.10% in 2024 and remaining at that level through 2025. This indicates a change in the company’s tax profile, potentially due to alterations in tax laws, jurisdictional mix of earnings, or the utilization of tax credits and deductions.
- Combined Trend
- The increase in interest paid, net of tax, coincided with a period of lower effective income tax rates (2022-2023). As the effective income tax rate increased in 2024 and 2025, the growth in interest expense moderated, although it remained at a higher level than in 2021. The net effect of these movements on overall profitability would require further analysis of pre-tax income and other financial statement items.
The observed trends suggest a potential increase in debt financing or a change in the terms of existing debt, contributing to the rise in net interest expense. The fluctuations in the effective income tax rate warrant further investigation to understand the underlying drivers and their impact on the company’s financial performance.
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Enterprise Value to FCFF Ratio, Current
RTX Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 292,730) |
| Free cash flow to the firm (FCFF) | 9,443) |
| Valuation Ratio | |
| EV/FCFF | 31.00 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Boeing Co. | 305.43 |
| Caterpillar Inc. | 38.36 |
| Eaton Corp. plc | 39.37 |
| GE Aerospace | 38.42 |
| Honeywell International Inc. | 26.47 |
| Lockheed Martin Corp. | 20.37 |
| EV/FCFF, Sector | |
| Capital Goods | 35.72 |
| EV/FCFF, Industry | |
| Industrials | 28.84 |
Based on: 10-K (reporting date: 2025-12-31).
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
RTX Corp., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 298,985) | 210,519) | 161,239) | 170,615) | 167,423) | |
| Free cash flow to the firm (FCFF)2 | 9,443) | 6,105) | 6,758) | 5,996) | 6,134) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 31.66 | 34.48 | 23.86 | 28.45 | 27.29 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Boeing Co. | 355.43 | — | 25.63 | 37.53 | — | |
| Caterpillar Inc. | 41.17 | 18.32 | 16.08 | 23.54 | 20.50 | |
| Eaton Corp. plc | 39.42 | 31.29 | 38.49 | 33.44 | 38.16 | |
| GE Aerospace | 39.48 | 38.98 | 29.56 | 17.29 | 56.53 | |
| Honeywell International Inc. | 28.64 | 27.10 | 29.13 | 29.82 | 25.22 | |
| Lockheed Martin Corp. | 20.74 | 20.56 | 17.62 | 19.69 | 13.92 | |
| EV/FCFF, Sector | ||||||
| Capital Goods | 37.64 | 46.45 | 23.34 | 25.87 | 32.16 | |
| EV/FCFF, Industry | ||||||
| Industrials | 29.85 | 31.37 | 25.97 | 24.33 | 28.81 | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
3 2025 Calculation
EV/FCFF = EV ÷ FCFF
= 298,985 ÷ 9,443 = 31.66
4 Click competitor name to see calculations.
The Enterprise Value to Free Cash Flow to the Firm (EV/FCFF) ratio exhibits fluctuations over the observed period. Enterprise Value initially increased from 2021 to 2022, while Free Cash Flow to the Firm decreased slightly. Subsequently, Enterprise Value declined in 2023 before experiencing substantial growth in 2024 and 2025. Free Cash Flow to the Firm also increased over the latter part of the period, though not at the same rate as Enterprise Value.
- EV/FCFF Trend
- The EV/FCFF ratio increased from 27.29 in 2021 to 28.45 in 2022, indicating a relatively stable valuation multiple. A decrease to 23.86 was then observed in 2023, suggesting a more favorable valuation based on free cash flow. The ratio then rose significantly to 34.48 in 2024, followed by a slight decrease to 31.66 in 2025. This indicates increasing valuation relative to free cash flow in 2024, with a modest correction in the following year.
The increase in the EV/FCFF ratio in 2024 and 2025 is primarily driven by the larger growth in Enterprise Value compared to Free Cash Flow to the Firm. While FCFF increased, the expansion of Enterprise Value outpaced this growth, resulting in a higher multiple. The initial decrease in the ratio in 2023, despite a rise in FCFF, was due to a more substantial decline in Enterprise Value during that year.
- Enterprise Value
- Enterprise Value demonstrated an initial increase between 2021 and 2022, followed by a decrease in 2023. Significant growth was then recorded in both 2024 and 2025, indicating a substantial increase in the company’s total value.
- Free Cash Flow to the Firm
- Free Cash Flow to the Firm experienced a slight decrease from 2021 to 2022. It then increased in 2023, and continued to grow through 2025, though the rate of increase was not consistent year-over-year.
Overall, the EV/FCFF ratio suggests a dynamic valuation profile. The fluctuations indicate changes in market perception of the company’s value relative to its cash-generating ability. The recent increases in the ratio warrant further investigation to determine the underlying drivers of Enterprise Value growth and assess the sustainability of the current valuation.
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