Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Motorola Solutions Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The financial data indicates that net cash provided by operating activities experienced some fluctuations over the five-year period. Beginning at $1,823 million in 2019, it decreased to $1,613 million in 2020, likely reflecting operational challenges or external factors impacting cash flow. However, the cash flow rebounded in 2021 to $1,837 million, nearly returning to the 2019 level. The subsequent year, 2022, showed a slight decrease to $1,823 million, matching the initial 2019 figure, suggesting some stability. Notably, in 2023, net cash provided by operating activities increased significantly to $2,044 million, the highest value within the given timeframe, indicating improved operational efficiency or increased business activity.
Free cash flow to the firm (FCFF) follows a similar pattern, starting at $1,774 million in 2019 and dipping to $1,628 million in 2020. The FCFF then rose to $1,767 million in 2021 and remained relatively stable at $1,771 million in 2022. In 2023, FCFF saw a marked increase to $1,978 million, paralleling the upward trend seen in net cash from operations.
- Trend Summary
- Both net cash from operating activities and free cash flow to the firm show an initial decline in 2020, followed by recovery and stabilization in the subsequent years. The peak values in 2023 represent the strongest cash generation in the observed period.
- Implications
- The recovery and eventual growth in cash flows suggest improving operational performance and an ability to generate sustainable free cash flow, which may enhance financial flexibility and support potential strategic initiatives.
Interest Paid, Net of Tax
Motorola Solutions Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
2 2023 Calculation
Interest paid, tax = Interest paid × EITR
= 234 × 20.10% = 47
The analysis of the financial data reveals the following trends for the company over the five-year period ending December 31, 2023.
- Effective Income Tax Rate (EITR)
- The effective income tax rate exhibited fluctuation across the observed years. Initially, the rate was relatively low at 13% in 2019, then increased to 18.8% in 2020 and slightly rose further to 19.5% in 2021. A pronounced dip occurred in 2022 when the rate decreased sharply to 9.8%, followed by a significant increase to 20.1% in 2023. This pattern indicates variability in tax expenses relative to income, possibly influenced by changes in tax regulations, income composition, or tax planning strategies employed by the company.
- Interest Paid, Net of Tax
- The net interest paid after tax displayed a general downward trend from 2019 through 2021, declining from $192 million to $167 million. However, in 2022, this metric rose noticeably to $204 million, representing the highest outflow during the five years, before falling again to $187 million in 2023. The fluctuations suggest variations in debt levels, interest rates, or refinancing activities, impacting the net interest expense experienced by the company.
Overall, the financial indicators demonstrate fluctuating tax burdens and net interest payments, reflecting dynamic operational and financial management over the course of the five years.
Enterprise Value to FCFF Ratio, Current
Motorola Solutions Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 70,827) |
| Free cash flow to the firm (FCFF) | 1,978) |
| Valuation Ratio | |
| EV/FCFF | 35.81 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Apple Inc. | 27.99 |
| Arista Networks Inc. | 31.70 |
| Cisco Systems Inc. | 26.63 |
| Dell Technologies Inc. | 34.49 |
| Super Micro Computer Inc. | — |
| EV/FCFF, Sector | |
| Technology Hardware & Equipment | 28.19 |
| EV/FCFF, Industry | |
| Information Technology | 57.77 |
Based on: 10-K (reporting date: 2023-12-31).
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
Motorola Solutions Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 58,138) | 49,420) | 41,010) | 34,544) | 35,601) | |
| Free cash flow to the firm (FCFF)2 | 1,978) | 1,771) | 1,767) | 1,628) | 1,774) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 29.39 | 27.91 | 23.21 | 21.22 | 20.07 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Apple Inc. | 27.21 | 22.40 | 26.45 | 24.67 | 18.01 | |
| Arista Networks Inc. | 39.01 | 89.98 | 38.47 | 29.00 | — | |
| Cisco Systems Inc. | 10.98 | 13.55 | 15.50 | 10.47 | 12.58 | |
| Dell Technologies Inc. | 34.88 | 6.45 | 9.28 | 8.76 | — | |
| Super Micro Computer Inc. | 21.06 | — | 25.04 | — | 3.79 | |
| EV/FCFF, Sector | ||||||
| Technology Hardware & Equipment | 24.95 | 20.82 | 23.63 | 21.09 | — | |
| EV/FCFF, Industry | ||||||
| Information Technology | 34.37 | 26.67 | 27.51 | 23.95 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
3 2023 Calculation
EV/FCFF = EV ÷ FCFF
= 58,138 ÷ 1,978 = 29.39
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value shows a consistent upward trend from 2019 to 2023. Beginning at $35,601 million in 2019, it slightly decreased to $34,544 million in 2020, then experienced a notable increase each subsequent year, reaching $58,138 million by 2023. This steady growth in EV indicates a rising market valuation or increasing enterprise worth over the period analyzed.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm demonstrates relative stability with minor fluctuations across the five-year period. Starting at $1,774 million in 2019, it decreased to $1,628 million in 2020, recovered to $1,767 million in 2021, remained virtually flat in 2022 at $1,771 million, and rose to $1,978 million in 2023. Although growth is modest, the overall trend in FCFF is positive towards the end of the period.
- EV to FCFF Ratio
- The EV/FCFF ratio has increased substantially throughout the period, rising from 20.07 in 2019 to 29.39 in 2023. This increasing ratio suggests that the enterprise value is growing at a faster pace than free cash flow, potentially reflecting higher market expectations for future growth or increased valuation multiples over time.
- Summary
- The data reveals a company experiencing a significant increase in enterprise value alongside relatively stable free cash flow. The faster growth in enterprise value compared to free cash flow is captured by the rising EV/FCFF ratio, indicating a higher valuation multiple. This pattern may signal market optimism or enhanced growth prospects incorporated into the company's valuation, despite the limited growth in actual cash generation capacity over the period.