Reynolds American Inc., FCFF calculation

US$ in millions

12 months ended:	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012
Net income	6,073)	3,253)	1,470)	1,718)	1,272)
Net noncash charges	(4,112)	(3,624)	(99)	571)	237)
Other changes that provided (used) cash	(681)	567)	252)	(981)	59)
Net cash flows from operating activities	1,280)	196)	1,623)	1,308)	1,568)
Interest paid, net of tax¹	446)	260)	161)	167)	162)
Capital expenditures	(206)	(174)	(204)	(153)	(88)
Free cash flow to the firm (FCFF)	1,520)	282)	1,580)	1,322)	1,642)

Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).

¹ See details »

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Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the Reynolds American Inc. suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	Reynolds American Inc. FCFF decreased from 2014 to 2015 but then increased from 2015 to 2016 not reaching 2014 level.

Reynolds American Inc., interest paid, net of tax calculation

US$ in millions

12 months ended:	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012
Effective Income Tax Rate (EITR)
EITR¹	37.30%	49.00%	36.10%	37.30%	34.90%
Interest Paid, Net of Tax
Interest paid, before tax	712)	510)	252)	267)	249)
Less: Interest paid, tax²	266)	250)	91)	100)	87)
Interest paid, net of tax	446)	260)	161)	167)	162)

Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).

¹ See details »

² 2016 Calculation
Interest paid, tax = Interest paid × EITR
= 712 × 37.30% = 266

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Reynolds American Inc., current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (US$ in millions)
Enterprise value (EV)	103,094)
Free cash flow to the firm (FCFF)	1,520)
Valuation Ratio
EV/FCFF	67.81
Benchmarks
EV/FCFF, Competitors¹
Altria Group Inc.	9.90
Coca-Cola Co.	26.52
Mondelēz International Inc.	29.26
PepsiCo Inc.	29.16

Based on: 10-K (reporting date: 2016-12-31).

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.

Reynolds American Inc., historical EV/FCFF calculation, comparison to benchmarks

	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012
Selected Financial Data (US$ in millions)
Enterprise value (EV)¹	97,440)	83,957)	41,466)	29,415)	26,890)
Free cash flow to the firm (FCFF)²	1,520)	282)	1,580)	1,322)	1,642)
Valuation Ratio
EV/FCFF³	64.09	297.61	26.24	22.24	16.38
Benchmarks
EV/FCFF, Competitors⁴
Altria Group Inc.	—	—	—	—	—
Coca-Cola Co.	—	—	—	—	—
Mondelēz International Inc.	—	—	—	—	—
PepsiCo Inc.	—	—	—	—	—

Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).

¹ See details »

² See details »

³ 2016 Calculation
EV/FCFF = EV ÷ FCFF
= 97,440 ÷ 1,520 = 64.09

⁴ Click competitor name to see calculations.

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Valuation ratio	Description	The company
EV/FCFF	Enterprise value to free cash flow to the firm is whole company valuation indicator.	Reynolds American Inc. EV/FCFF ratio increased from 2014 to 2015 but then slightly decreased from 2015 to 2016 not reaching 2014 level.

Reynolds American Inc. (NYSE:RAI)

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