Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Time Warner Cable Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
An analysis of the cash flow metrics between 2011 and 2015 reveals a diverging trend between the cash generated from operations and the resulting free cash flow to the firm (FCFF).
- Cash Provided by Operating Activities
- A general upward trajectory is observed in operating cash flows, which grew from 5,688 million US$ in 2011 to 6,539 million US$ by 2015. Despite a marginal decrease in 2012, the figures demonstrate consistent growth in the latter half of the period, particularly with a notable increase between 2013 and 2014.
- Free Cash Flow to the Firm (FCFF)
- In contrast to operating cash flows, FCFF exhibits a sustained downward trend. From a peak of 3,784 million US$ in 2011, the value declined to 2,957 million US$ by 2015. This represents a steady erosion of the cash available to all capital providers over the five-year span, despite the growth in operational liquidity.
- Analysis of Cash Flow Divergence
- A significant widening gap is evident between operating cash flow and FCFF. While cash provided by operating activities increased by approximately 14.9% from 2011 to 2015, FCFF decreased by approximately 21.8%. This divergence indicates a substantial increase in capital expenditures or other investment outlays during this period, as a progressively larger portion of operational cash flow was utilized for investments rather than being retained as free cash flow.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Interest Paid, Net of Tax
Time Warner Cable Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
2 2015 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= 1,482 × 38.29% = 567
An analysis of the financial figures reveals a divergent trend between the effective income tax rate and the net cash paid for interest from 2011 through 2015.
- Effective Income Tax Rate (EITR)
- A consistent and steady upward trajectory is observed in the effective income tax rate. The rate increased annually, rising from 32.29% in 2011 to 38.29% by the end of 2015, reflecting a total increase of 6 percentage points over the five-year period.
- Cash Paid for Interest, Net of Tax
- Net cash outflows for interest payments experienced a peak in 2012 at 1,147 million US$, following an initial increase from 1,080 million US$ in 2011. From 2012 onward, a sustained downward trend is evident, with expenditures declining to 1,119 million US$ in 2013, 977 million US$ in 2014, and reaching a minimum of 915 million US$ in 2015.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Enterprise Value to FCFF Ratio, Current
Time Warner Cable Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 81,348) |
| Free cash flow to the firm (FCFF) | 2,957) |
| Valuation Ratio | |
| EV/FCFF | 27.51 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Alphabet Inc. | 56.38 |
| Comcast Corp. | 7.55 |
| Meta Platforms Inc. | 40.83 |
| Netflix Inc. | 30.02 |
| Walt Disney Co. | 18.79 |
Based on: 10-K (reporting date: 2015-12-31).
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
Time Warner Cable Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 73,738) | 65,077) | 64,756) | 48,931) | 45,664) | |
| Free cash flow to the firm (FCFF)2 | 2,957) | 3,191) | 3,634) | 3,540) | 3,784) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 24.94 | 20.40 | 17.82 | 13.82 | 12.07 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
3 2015 Calculation
EV/FCFF = EV ÷ FCFF
= 73,738 ÷ 2,957 = 24.94
4 Click competitor name to see calculations.
Between 2011 and 2015, a significant divergence is observed between the enterprise value and the free cash flow to the firm, resulting in a steady expansion of the valuation multiple.
- Enterprise Value Trends
- The enterprise value exhibited consistent growth over the five-year period, increasing from 45,664 million US dollars in 2011 to 73,738 million US dollars by the end of 2015. The most substantial year-over-year increase occurred between 2012 and 2013, where the value rose by approximately 33%.
- Free Cash Flow to the Firm (FCFF) Performance
- In contrast to the valuation growth, FCFF demonstrated a general downward trajectory. Starting at 3,784 million US dollars in 2011, the cash flow decreased to 2,957 million US dollars in 2015. While a marginal recovery was noted in 2013, the overall trend reflects a contraction in the amount of free cash flow generated by the firm.
- EV/FCFF Ratio Analysis
- The EV/FCFF ratio more than doubled during the analyzed period, rising from 12.07 in 2011 to 24.94 in 2015. This consistent upward trend indicates that the market valuation of the company increased at a significantly faster rate than its underlying cash flow generation, leading to a higher valuation multiple.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?