Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Time Warner Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2017-12-31), 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).
The analysis of the financial data reveals a consistent upward trend in both cash provided by operations and free cash flow to the firm (FCFF) over the observed period from 2013 to 2017.
- Cash Provided by Operations
- The cash provided by operations has shown steady growth throughout the five-year period. Starting at 3,716 million US dollars in 2013, it experienced a slight dip in 2014 to 3,681 million, followed by continuous increases each subsequent year, reaching 5,094 million by 2017. This upward trajectory reflects an improvement in the company's operational efficiency and cash generation capability.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm exhibits a similar positive trend. Beginning at 3,919 million US dollars in 2013, it saw a notable increase to 4,264 million in 2014 and stabilized with moderate growth thereafter, culminating at 5,498 million in 2017. The growth in FCFF signifies enhanced financial flexibility and potential for reinvestment or debt reduction.
- Comparative Observations
- Both metrics reveal consistent improvement, with FCFF consistently remaining slightly higher than cash provided by operations. This margin may indicate effective working capital and capital expenditure management. The increasing spread also suggests the company's growing ability to generate free cash flow beyond operating cash, facilitating strategic financial management.
Interest Paid, Net of Tax
Time Warner Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2017-12-31), 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).
2 2017 Calculation
Cash payments made for interest, tax = Cash payments made for interest × EITR
= 1,202 × 11.79% = 142
The financial data exhibits notable trends over the five-year period. The effective income tax rate (EITR) displays significant fluctuation, starting at 33% in 2013, sharply decreasing to 17% in 2014, and then increasing again to 30% in 2015. This is followed by a moderate decrease to 25% in 2016, and a substantial decline to 11.79% in 2017, indicating considerable variability and a general downward movement towards the end of the period.
Regarding cash payments made for interest, net of tax, the values show an overall increasing trend despite some fluctuations. Beginning at 805 million US dollars in 2013, these payments rise to 1,057 million in 2014, slightly decrease to 883 million in 2015, and then increase once more to 1,043 million in 2016. The upward movement continues marginally with a value of 1,060 million in 2017. This pattern reflects a generally rising cost of interest payments over the analyzed period, with a minor dip in the middle years.
- Effective Income Tax Rate (EITR)
- Fluctuated significantly, with a sharp decrease in 2014 followed by a rise in 2015 and gradual decline thereafter, reaching the lowest point in 2017.
- Cash Payments Made for Interest, Net of Tax
- Generally increased over the period from 2013 to 2017, though a notable decline occurred in 2015 before the upward trend resumed.
Enterprise Value to FCFF Ratio, Current
Time Warner Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 94,404) |
| Free cash flow to the firm (FCFF) | 5,498) |
| Valuation Ratio | |
| EV/FCFF | 17.17 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Alphabet Inc. | 28.60 |
| Comcast Corp. | 14.32 |
| Meta Platforms Inc. | 32.86 |
| Netflix Inc. | 75.81 |
| Take-Two Interactive Software Inc. | — |
| Walt Disney Co. | 25.26 |
Based on: 10-K (reporting date: 2017-12-31).
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
Time Warner Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 94,719) | 97,959) | 74,309) | 88,328) | 76,049) | |
| Free cash flow to the firm (FCFF)2 | 5,498) | 5,294) | 4,311) | 4,264) | 3,919) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 17.23 | 18.50 | 17.24 | 20.71 | 19.40 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Take-Two Interactive Software Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 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).
3 2017 Calculation
EV/FCFF = EV ÷ FCFF
= 94,719 ÷ 5,498 = 17.23
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value displayed fluctuations over the five-year period. It increased from 76,049 million USD in 2013 to 88,328 million USD in 2014, showing a significant rise. However, in 2015, it declined to 74,309 million USD. Subsequently, it reached its peak at 97,959 million USD in 2016 before slightly decreasing to 94,719 million USD in 2017. The overall trend displays volatility with a notable peak in 2016.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm demonstrated a steady upward trend throughout the period. Beginning with 3,919 million USD in 2013, it consistently increased each year, reaching 5,498 million USD by 2017. This indicates improving cash generation capability over time.
- EV/FCFF Ratio
- The EV/FCFF ratio fluctuated between approximately 17 and 21 during the period. It started at 19.4 in 2013, rose to a peak of 20.71 in 2014, then declined to 17.24 in 2015. It increased again to 18.5 in 2016 before settling back near its previous low at 17.23 in 2017. These changes suggest varying market valuations relative to cash flow, with the valuation multiples generally decreasing towards the latter years.
- Summary of Financial Trends
- The data shows a company with variable enterprise valuation but steadily increasing operational cash generation. The volatility in enterprise value contrasts with the consistent rise in free cash flow, leading to a decreasing valuation multiple in recent years. This pattern may indicate market adjustments or improved cash flow efficiency influencing company valuation metrics.