HP Inc., FCFF calculation

US$ in millions

12 months ended:	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
Net earnings	5,327)	2,526)	2,496)	4,554)	5,013)	5,113)
Net noncash charges	(2,406)	1,312)	1,071)	6,349)	6,768)	6,468)
Changes in operating assets and liabilities, net of acquisitions	1,607)	(161)	(337)	(4,413)	552)	27)
Net cash provided by operating activities	4,528)	3,677)	3,230)	6,490)	12,333)	11,608)
Interest expense paid, net of tax¹	252)	248)	225)	512)	519)	657)
Investment in property, plant and equipment	(546)	(402)	(433)	(3,603)	(3,853)	(3,199)
Proceeds from sale of property, plant and equipment	172)	69)	6)	424)	843)	653)
Purchase of assets under capital leases	(258)	(200)	(185)	(70)	(113)	(3)
Free cash flow to the firm (FCFF)	4,148)	3,392)	2,843)	3,753)	9,729)	9,716)

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

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Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the HP Inc. suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	HP Inc. FCFF increased from 2016 to 2017 and from 2017 to 2018.

HP Inc., interest paid, net of tax calculation

US$ in millions

12 months ended:	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
Effective Income Tax Rate (EITR)
EITR¹	23.30%	22.90%	29.10%	3.80%	23.50%	21.50%
Interest Paid, Net of Tax
Interest expense paid, before tax	329)	322)	318)	532)	678)	837)
Less: Interest expense paid, tax²	77)	74)	93)	20)	159)	180)
Interest expense paid, net of tax	252)	248)	225)	512)	519)	657)

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

¹ See details »

² 2018 Calculation
Interest expense paid, tax = Interest expense paid × EITR
= 329 × 23.30% = 77

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

Selected Financial Data (US$ in millions)
Enterprise value (EV)	27,629)
Free cash flow to the firm (FCFF)	4,148)
Valuation Ratio
EV/FCFF	6.66
Benchmarks
EV/FCFF, Competitors¹
Apple Inc.	35.74
Arista Networks Inc.	68.57
Cisco Systems Inc.	23.00
Super Micro Computer Inc.	28.94

Based on: 10-K (reporting date: 2018-10-31).

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.

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

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
Selected Financial Data (US$ in millions)
Enterprise value (EV)¹	35,448)	34,944)	27,000)	29,583)	77,821)	64,390)
Free cash flow to the firm (FCFF)²	4,148)	3,392)	2,843)	3,753)	9,729)	9,716)
Valuation Ratio
EV/FCFF³	8.55	10.30	9.50	7.88	8.00	6.63
Benchmarks
EV/FCFF, Competitors⁴
Apple Inc.	—	—	—	—	—	—
Arista Networks Inc.	—	—	—	—	—	—
Cisco Systems Inc.	—	—	—	—	—	—
Super Micro Computer Inc.	18.14	—	—	—	—	—

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

¹ See details »

² See details »

³ 2018 Calculation
EV/FCFF = EV ÷ FCFF
= 35,448 ÷ 4,148 = 8.55

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.	HP Inc. EV/FCFF ratio increased from 2016 to 2017 but then decreased significantly from 2017 to 2018.

HP Inc. (NYSE:HPQ)

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