Enterprise Value to FCFF (EV/FCFF)
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Free Cash Flow to The Firm (FCFF)
Waste Management Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1, 2 See details »
- Net Cash Provided by Operating Activities
- The net cash provided by operating activities exhibited a generally upward trend over the five-year period. Beginning at 3,180 million US dollars in 2017, the figure increased consistently to reach 3,874 million in 2019. Although there was a decline in 2020 to 3,403 million, possibly influenced by external factors impacting operations during that year, the amount rebounded sharply to 4,338 million in 2021, marking the highest level recorded in the timeframe. This suggests an overall strengthening of operating cash generation capacity, with a notable resilience following the 2020 downturn.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm also followed a similar upward trajectory, rising from 1,927 million US dollars in 2017 to 2,388 million in 2019. A decrease was observed in 2020, with FCFF declining to 2,148 million, mirroring the dip in operating cash flow. However, 2021 saw a considerable recovery with FCFF increasing to 2,744 million, the highest across all reported periods. This pattern indicates a positive overall trend in the firm’s available cash after operational and capital expenditures, with a brief interruption in 2020 followed by improved cash flow generation capability in the subsequent year.
- Summary
- Both operating cash flow and free cash flow trends reflect growth and recovery dynamics. The decline in 2020 suggests a potential operational challenge or external impact affecting cash generation, but the strong rebound in 2021 indicates effective management and business resilience. These trends imply enhanced liquidity and financial flexibility over time, facilitating potential reinvestment, debt repayment, or shareholder distributions.
Interest Paid, Net of Tax
Waste Management Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2 2021 Calculation
Interest paid, net of capitalized interest, tax = Interest paid, net of capitalized interest × EITR
= × =
3 2021 Calculation
Capitalized interest, tax = Capitalized interest × EITR
= × =
- Effective Income Tax Rate (EITR) Trend
- The effective income tax rate exhibits a notable decline from 35.18% in 2017 to 19.55% in 2018, representing a significant reduction. Following this drop, the tax rate remains relatively stable with minor fluctuations, increasing slightly to 20.61% in 2019, 20.94% in 2020, and 22.62% in 2021. Overall, the tax rate stabilizes at a level considerably lower than the initial 2017 figure.
- Interest Paid, Net of Capitalized Interest and Tax
- Interest paid shows a consistent upward trend from 2017 through 2020, rising from US$246 million to US$364 million. In 2021, there is a decline to US$299 million, which interrupts the previous growth pattern. This reduction in 2021 may suggest improved debt management, refinancing, or changes in interest expenses.
- Capitalized Interest, Net of Tax
- Capitalized interest increases from US$10 million in 2017 to a peak of US$17 million in 2019, indicating higher investment or borrowing costs that were capitalized during these years. Subsequently, it decreases to US$13 million in 2020 and further drops back to US$10 million in 2021, returning to its 2017 level. This pattern suggests a cyclical or project-based capital expenditure behavior.
Enterprise Value to FCFF Ratio, Current
Waste Management Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Industry | |
| Industrials | |
Based on: 10-K (reporting date: 2021-12-31).
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
Waste Management Inc., historical EV/FCFF calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Enterprise Value (EV)
- The enterprise value exhibited a general upward trend over the analyzed period. Beginning at 45,929 million USD at the end of 2017, it increased steadily, reaching a peak of 72,442 million USD by the end of 2021. Despite a slight decline between 2019 and 2020, where EV decreased from 62,701 million USD to 60,043 million USD, the overall trajectory remains positive, indicating growth in company valuation over these years.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm demonstrated consistent growth from 2017 through 2019, rising from 1,927 million USD to 2,388 million USD. There was a decline in 2020, with FCFF dropping to 2,148 million USD, which could be reflective of external economic factors impacting cash generation. However, by the end of 2021, FCFF rebounded significantly to 2,744 million USD, surpassing previous highs and indicating a strong recovery or improvement in operational cash flow.
- EV/FCFF Ratio
- The EV to FCFF ratio showed an overall increasing pattern from 23.83 in 2017 to a high of 27.95 in 2020, suggesting that the enterprise value was growing at a faster rate than free cash flow for much of this period. The peak ratio in 2020 could imply market expectations of future growth or a premium valuation relative to cash flow at that time. In 2021, the ratio decreased slightly to 26.4, reflecting the significant increase in free cash flow that outpaced the rise in enterprise value during the same period. This reduction in the ratio may indicate a more balanced valuation relative to cash generating ability after prior years of premium valuation.
- Summary Insight
- Overall, the data indicates that while enterprise value generally increased, it did so alongside fluctuating free cash flow, with a notable dip in 2020 possibly linked to external economic conditions. The increase and subsequent slight decline in the EV/FCFF ratio suggest evolving market perceptions of the firm's value relative to its cash generating capacity. The strong rebound in free cash flow in 2021 contributes to a more favorable valuation balance.