Paycom Software Inc., FCFF calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income	281,389)	195,960)	143,453)	180,576)	137,065)
Net noncash charges	184,238)	197,012)	164,715)	110,960)	85,563)
Changes in operating assets and liabilities	(100,524)	(73,610)	(80,961)	(67,273)	(37,811)
Net cash provided by operating activities	365,103)	319,362)	227,207)	224,263)	184,817)
Cash paid for interest, net of amounts capitalized, net of tax¹	365)	2)	—)	713)	552)
Interest costs capitalized, net of tax²	648)	1,078)	1,155)	480)	624)
Purchases of intangible assets	(4,120)	(5,500)	—)	—)	—)
Purchases of property and equipment	(132,678)	(120,692)	(94,102)	(92,934)	(59,906)
Free cash flow to the firm (FCFF)	229,318)	194,250)	134,260)	132,522)	126,087)

Based on: 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), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the Paycom Software Inc. suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	Paycom Software Inc. FCFF increased from 2020 to 2021 and from 2021 to 2022.

Paycom Software Inc., interest paid, net of tax calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Effective Income Tax Rate (EITR)
EITR¹	28.00%	23.00%	23.00%	20.00%	22.00%
Interest Paid, Net of Tax
Cash paid for interest, net of amounts capitalized, before tax	507)	2)	—)	891)	708)
Less: Cash paid for interest, net of amounts capitalized, tax²	142)	—)	—)	178)	156)
Cash paid for interest, net of amounts capitalized, net of tax	365)	2)	—)	713)	552)
Interest Costs Capitalized, Net of Tax
Interest costs capitalized, before tax	900)	1,400)	1,500)	600)	800)
Less: Interest costs capitalized, tax³	252)	322)	345)	120)	176)
Interest costs capitalized, net of tax	648)	1,078)	1,155)	480)	624)

Based on: 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), 10-K (reporting date: 2018-12-31).

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² 2022 Calculation
Cash paid for interest, net of amounts capitalized, tax = Cash paid for interest, net of amounts capitalized × EITR
= 507 × 28.00% = 142

³ 2022 Calculation
Interest costs capitalized, tax = Interest costs capitalized × EITR
= 900 × 28.00% = 252

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Paycom Software Inc., current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (US$ in thousands)
Enterprise value (EV)	9,013,886)
Free cash flow to the firm (FCFF)	229,318)
Valuation Ratio
EV/FCFF	39.31
Benchmarks
EV/FCFF, Industry
Industrials	25.77

Based on: 10-K (reporting date: 2022-12-31).

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.

Paycom Software Inc., historical EV/FCFF calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in thousands)
Enterprise value (EV)¹	17,421,005)	18,763,705)	23,064,675)	17,387,028)	10,205,741)
Free cash flow to the firm (FCFF)²	229,318)	194,250)	134,260)	132,522)	126,087)
Valuation Ratio
EV/FCFF³	75.97	96.60	171.79	131.20	80.94
Benchmarks
EV/FCFF, Industry
Industrials	24.30	28.80	189.49	—	—

Based on: 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), 10-K (reporting date: 2018-12-31).

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² See details »

³ 2022 Calculation
EV/FCFF = EV ÷ FCFF
= 17,421,005 ÷ 229,318 = 75.97

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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.	Paycom Software Inc. EV/FCFF ratio decreased from 2020 to 2021 and from 2021 to 2022.

Paycom Software Inc. (NYSE:PAYC)

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