Zoetis Inc., FCFF calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income attributable to Zoetis Inc.	2,037)	1,638)	1,500)	1,428)	864)
Net loss attributable to noncontrolling interests	(3)	(2)	—)	(4)	(2)
Net noncash charges	522)	575)	446)	254)	494)
Other changes in assets and liabilities, net of acquisitions and divestitures	(343)	(85)	(151)	112)	(10)
Net cash provided by operating activities	2,213)	2,126)	1,795)	1,790)	1,346)
Cash paid during the period for interest, net of capitalized interest, net of tax¹	207)	211)	206)	150)	107)
Capitalized interest expense, net of tax²	16)	14)	11)	7)	3)
Capital expenditures	(477)	(453)	(460)	(338)	(224)
Free cash flow to the firm (FCFF)	1,959)	1,898)	1,552)	1,609)	1,232)

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).

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Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the Zoetis Inc. suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	Zoetis Inc. FCFF increased from 2019 to 2020 and from 2020 to 2021.

Zoetis Inc., interest paid, net of tax calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Effective Income Tax Rate (EITR)
EITR¹	18.20%	18.00%	16.70%	20.90%	35.80%
Interest Paid, Net of Tax
Cash paid during the period for interest, net of capitalized interest, before tax	253)	257)	247)	190)	167)
Less: Cash paid during the period for interest, net of capitalized interest, tax²	46)	46)	41)	40)	60)
Cash paid during the period for interest, net of capitalized interest, net of tax	207)	211)	206)	150)	107)
Interest Costs Capitalized, Net of Tax
Capitalized interest expense, before tax	20)	17)	13)	9)	4)
Less: Capitalized interest expense, tax³	4)	3)	2)	2)	1)
Capitalized interest expense, net of tax	16)	14)	11)	7)	3)

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 See details »

² 2021 Calculation
Cash paid during the period for interest, net of capitalized interest, tax = Cash paid during the period for interest, net of capitalized interest × EITR
= 253 × 18.20% = 46

³ 2021 Calculation
Capitalized interest expense, tax = Capitalized interest expense × EITR
= 20 × 18.20% = 4

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Zoetis Inc., current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (US$ in millions)
Enterprise value (EV)	83,797)
Free cash flow to the firm (FCFF)	1,959)
Valuation Ratio
EV/FCFF	42.77
Benchmarks
EV/FCFF, Competitors¹
AbbVie Inc.	14.20
Amgen Inc.	21.02
Bristol-Myers Squibb Co.	9.17
Eli Lilly & Co.	638.64
Gilead Sciences Inc.	12.37
Johnson & Johnson	18.25
Merck & Co. Inc.	37.02
Pfizer Inc.	30.93
Regeneron Pharmaceuticals Inc.	22.89
Thermo Fisher Scientific Inc.	28.14
EV/FCFF, Sector
Pharmaceuticals, Biotechnology & Life Sciences	18.45
EV/FCFF, Industry
Health Care	18.80

Based on: 10-K (reporting date: 2021-12-31).

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.

Zoetis Inc., historical EV/FCFF calculation, comparison to benchmarks

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Selected Financial Data (US$ in millions)
Enterprise value (EV)¹	96,445)	82,629)	73,350)	45,705)	41,497)
Free cash flow to the firm (FCFF)²	1,959)	1,898)	1,552)	1,609)	1,232)
Valuation Ratio
EV/FCFF³	49.22	43.54	47.27	28.40	33.69
Benchmarks
EV/FCFF, Competitors⁴
AbbVie Inc.	13.18	13.95	11.60	—	—
Amgen Inc.	15.82	14.51	16.05	—	—
Bristol-Myers Squibb Co.	10.52	11.63	23.39	—	—
Eli Lilly & Co.	38.37	39.01	36.26	—	—
Gilead Sciences Inc.	8.42	13.60	9.78	—	—
Johnson & Johnson	21.25	20.75	19.31	—	—
Merck & Co. Inc.	23.27	34.12	20.46	—	—
Pfizer Inc.	8.40	21.74	19.44	—	—
Regeneron Pharmaceuticals Inc.	9.81	25.74	19.54	—	—
Thermo Fisher Scientific Inc.	33.14	26.14	28.88	—	—
EV/FCFF, Sector
Pharmaceuticals, Biotechnology & Life Sciences	15.38	19.26	18.55	—	—
EV/FCFF, Industry
Health Care	17.16	17.81	18.15	—	—

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 See details »

² See details »

³ 2021 Calculation
EV/FCFF = EV ÷ FCFF
= 96,445 ÷ 1,959 = 49.22

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.	Zoetis Inc. EV/FCFF ratio decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Zoetis Inc. (NYSE:ZTS)

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