Monsanto Co., FCFF calculation

US$ in millions

12 months ended:	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014	Aug 31, 2013	Aug 31, 2012
Net income attributable to Monsanto Company	2,260)	1,336)	2,314)	2,740)	2,482)	2,045)
Net (income) loss attributable to noncontrolling interest	13)	(23)	11)	22)	43)	48)
Net noncash charges	1,042)	1,233)	956)	924)	728)	1,070)
Changes in assets and liabilities that provided (required) cash, net of acquisitions	(89)	42)	(173)	(632)	(513)	(112)
Net cash provided by operating activities	3,226)	2,588)	3,108)	3,054)	2,740)	3,051)
Cash payments for interest, net of tax¹	327)	252)	249)	113)	103)	111)
Interest capitalized on construction, net of tax²	34)	21)	20)	19)	17)	15)
Capital expenditures	(1,240)	(923)	(967)	(1,005)	(741)	(646)
Free cash flow to the firm (FCFF)	2,347)	1,938)	2,410)	2,182)	2,119)	2,531)

Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).

^{1, 2} See details »

Net Cash Provided by Operating Activities: The net cash provided by operating activities exhibited a fluctuating trend over the six-year period. Starting at 3,051 million USD in 2012, there was a decline to 2,740 million USD in 2013. However, this was followed by a recovery in 2014 and 2015, reaching 3,054 million USD and 3,108 million USD respectively. A subsequent decrease occurred in 2016 to 2,588 million USD, before rising again to 3,226 million USD in 2017. Overall, the operating cash flow remained robust, with 2017 marking the highest level within the analyzed period.
Free Cash Flow to the Firm (FCFF): The free cash flow to the firm showed a similar yet more pronounced variation compared to operating cash flow. It started at 2,531 million USD in 2012 and declined steadily to 2,119 million USD in 2013. Minimal recovery was observed in 2014 with 2,182 million USD, followed by an increase to 2,410 million USD in 2015. The flow then decreased significantly to 1,938 million USD in 2016 before rising to 2,347 million USD in 2017. Despite the fluctuations, the FCFF ended the period below its initial value, indicating some volatility in cash generation after operational expenses and capital expenditures.
Comparison and Insight: Both net cash from operations and free cash flow to the firm demonstrate cyclical tendencies within the period analyzed. The operating cash flows tend to maintain higher levels relative to FCFF, reflecting capital expenditure or investment requirements impacting the free cash flow. The data suggests that while operational cash generation remains stable with peaks in 2015 and 2017, the net free cash flow is more sensitive to capital outflows or other firm-specific financial activities, resulting in more pronounced declines in 2013 and 2016.

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Monsanto Co., interest paid, net of tax calculation

US$ in millions

12 months ended:	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014	Aug 31, 2013	Aug 31, 2012
Effective Income Tax Rate (EITR)
EITR¹	21.69%	34.91%	27.33%	28.17%	26.68%	30.15%
Interest Paid, Net of Tax
Cash payments for interest, before tax	417)	387)	343)	158)	141)	159)
Less: Cash payments for interest, tax²	90)	135)	94)	45)	38)	48)
Cash payments for interest, net of tax	327)	252)	249)	113)	103)	111)
Interest Costs Capitalized, Net of Tax
Interest capitalized on construction, before tax	44)	32)	27)	27)	23)	21)
Less: Interest capitalized on construction, tax³	10)	11)	7)	8)	6)	6)
Interest capitalized on construction, net of tax	34)	21)	20)	19)	17)	15)

Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).

¹ See details »

² 2017 Calculation
Cash payments for interest, tax = Cash payments for interest × EITR
= 417 × 21.69% = 90

³ 2017 Calculation
Interest capitalized on construction, tax = Interest capitalized on construction × EITR
= 44 × 21.69% = 10

Effective Income Tax Rate (EITR) Trend: The effective income tax rate displayed fluctuations over the observed periods. It started at 30.15% in 2012 and decreased to 26.68% in 2013, followed by a slight increase to 28.17% in 2014 and a minor decline to 27.33% in 2015. A notable rise occurred in 2016, reaching 34.91%, before dropping significantly to 21.69% in 2017. This pattern indicates variability in tax strategy or tax environment over the years, with the most substantial decline observed in the final period.
Cash Payments for Interest, Net of Tax: Cash payments for interest, net of tax, showed a steady upward trend throughout the periods analyzed. The amount increased from $111 million in 2012 to $327 million in 2017. The increase was gradual between 2012 and 2014, ranging from $103 million to $113 million, but experienced a sharp rise starting from 2015, nearly tripling from $113 million to $327 million by 2017. This suggests a rising interest burden, possibly due to increased debt levels or higher interest rates.
Interest Capitalized on Construction, Net of Tax: Interest capitalized on construction also exhibited a consistent increase over the time span. Beginning at $15 million in 2012, this amount grew incrementally each year, reaching $34 million in 2017. The increase is relatively moderate compared to the cash interest payments but shows a steady growth pattern, indicating ongoing investment in construction projects with growing financing costs being capitalized.

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Monsanto Co., current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (US$ in millions)
Enterprise value (EV)	58,374)
Free cash flow to the firm (FCFF)	2,347)
Valuation Ratio
EV/FCFF	24.87
Benchmarks
EV/FCFF, Competitors¹
lululemon athletica inc.	16.80
Nike Inc.	15.48

Based on: 10-K (reporting date: 2017-08-31).

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.

Monsanto Co., historical EV/FCFF calculation, comparison to benchmarks

	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014	Aug 31, 2013	Aug 31, 2012
Selected Financial Data (US$ in millions)
Enterprise value (EV)¹	59,773)	52,204)	46,537)	59,696)	54,950)	46,106)
Free cash flow to the firm (FCFF)²	2,347)	1,938)	2,410)	2,182)	2,119)	2,531)
Valuation Ratio
EV/FCFF³	25.47	26.94	19.31	27.36	25.93	18.22
Benchmarks
EV/FCFF, Competitors⁴
lululemon athletica inc.	—	—	—	—	—	—
Nike Inc.	—	—	—	—	—	—

Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).

¹ See details »

² See details »

³ 2017 Calculation
EV/FCFF = EV ÷ FCFF
= 59,773 ÷ 2,347 = 25.47

⁴ Click competitor name to see calculations.

Enterprise value (EV): The enterprise value exhibited overall growth across the analyzed periods, starting at $46,106 million in August 2012 and reaching $59,773 million by August 2017. There was a notable peak in August 2014 at $59,696 million, followed by a decline to $46,537 million in August 2015. After this dip, the value recovered and increased steadily through 2017.
Free cash flow to the firm (FCFF): The free cash flow to the firm showed fluctuations throughout the timeline. It began at $2,531 million in August 2012, experienced a slight decline in the subsequent years with fluctuations around $2,100 to $2,400 million, reaching its lowest point at $1,938 million in August 2016. A recovery occurred in August 2017 when FCFF rose to $2,347 million.
EV/FCFF Ratio: The ratio of enterprise value to free cash flow to the firm showed significant variability, indicating changing market valuation relative to cash generation. It started at 18.22 in August 2012, increased steadily to peak at 27.36 in August 2014, then decreased sharply to 19.31 in August 2015. Subsequently, it rose again, fluctuating near the mid-20s, finishing at 25.47 in August 2017. These variations suggest periods of differing market optimism or shifts in operational performance impacting valuation multiples.

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Monsanto Co. (NYSE:MON)

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