VALUATION

FORMULAE SHEET


Cost of Equity = Riskfree Rate + Country Premium + Beta (Mature market premium)
Cost of Equity = Riskfree Rate + Beta (Mature market premium + Country Premium)
Cost of Equity = Riskfree Rate + Beta (Mature market premium) + ! (Country Premium)

! = % of revenues domestically firm / % of revenues domestically avg firm

Levered Beta = Unlevered Beta {1+[(1-tax rate)(Debt/Equity)]}

Interest Coverage Ratio = EBIT / Interest Expenses
Cost of debt = Riskfree rate + Company default spread

EBIT (1-T)
- (Capex deprec)
- Change in non-cash Working Capital
= FCFF
EBIT (1-T) * (1 Reinvestment rate)
= FCFF

Net income
- (Capex deprec)
- Change in non-cash Working Capital
- (Debt principal repayment New debt issues)
- Preferred dividends paid
= Free cash flow to Equity

Net income
- ( 1 ") (Capex deprec)
- ( 1 - ") Change in non-cash Working Capital
= Free cash flow to Equity where " = Debt ratio


Adjusted Operating Earnings = Operating Earnings + Operating Lease Expenses
- Annual lease depreciation

Adjusted Operating Income = Operating income + R&D expenses
- Amortization of research asset

gEPS = Retained Earnings t-1 / NI t-1 * ROE

ROE = NI / BV of equity

gEBIT = (Net Capital Expenditures + Change in WC)/EBIT(1-t) * ROC

ROC = EBIT (1-T)/ BV capital

Expected growth rate
= Reinvestment rate *ROC t+1 + {(ROCt+1 ROCt))/ROCt}