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Enterprise value (EV), total enterprise value (TEV), or firm value (FV) is an economic measure reflecting the market value of a business (i.e. as distinct from market price). It is a sum of claims by all claimants: creditors (secured and unsecured) and shareholders (preferred and common).
EV/ Enterprise FCF: Enterprise value / Free cash flow. Enterprise FCF is core EBITDA less actual capital expenditure requirement and actual increase in working capital requirement Less subjective than opFCF; Better allows for differences in capital intensiveness compared to EBITDA; Less susceptible to accounting differences than EBIT
Free cash flow to firm (FCFF) is the cash flow available to all the firm's providers of capital once the firm pays all operating expenses (including taxes) and expenditures needed to support the firm's productive capacity. The providers of capital include common stockholders, bondholders, preferred stockholders, and other claimholders.
Consider: From 2003 through 2023, the valuation of Leidos stock averaged an enterprise-value-to-free-cash-flow (EV/FCF) ratio of 1.3. ... within 10% of "fair value." Additionally, strong free cash ...
Free cash flow, meanwhile, will be used to pay down debt, pay a dividend, and buy back shares. ... (P/E) ratio of about 7.9 based on 2025 analyst estimates and an enterprise value ...
Its free cash flow turned negative, and it ended its latest quarter with $18.1 billion in long-term debt. ... However, with an enterprise value of $22.8 billion, it trades at less than two times ...
Some investors prefer using free cash flow instead of net income to measure a company's financial performance and calculate the intrinsic value of the company, because free cash flow is more difficult to manipulate than net income. The problems with this approach are discussed in the cash flow and return of capital articles. [5]
In general, "Value of firm" represents the firm's enterprise value (i.e. its market value as distinct from market price); for corporate finance valuations, this represents the project's net present value or NPV. The second term represents the continuing value of future cash flows beyond the forecasting term; here applying a "perpetuity growth ...