# tatamotors

Document Sample

```					                                                              FCFF VALUATION MODEL
Before you start The spreadsheet has circular reasoning. This is not a problem. Go into calculation options (in excel) and check
the iteration box.
This
What the model does model is designed to value firms with operating income that is either positive or can be normalized to be
positive. It allows for up to 15 years of high growth, and can be used either as a 2-stage or a 3-stage model.
Inputs           The inputs are in the following pages:
1. The bulk of the inputs are in the master inputs page. Here, you can input the numbers from the current
financial statements, and review and change the inputs for the valuation.
2. If you want to normalized operating income, use the earnings normalizer worksheet.
3. If you have R&D or operating leases, you will need to input the required numbers in those worksheets.
Important: Be consistent about the units you use. If you use millions, use millions for all of your inputs.
Options          The spreadsheet can be used to value a company, with fixed inputs for a high growth phase and different inputs
for a stable growth phase (2-stage model) or it can be adjusted to allow for a transition phase (3-stage model).
To switch from one to the other, enter yes in the master input page to the question of whether you want the
inputs adjusted during the second half of the high growth phase.
You can even make it a stable growth model, by setting the length of the high growth period to zero.
Other worksheets There are two other worksheets that you might find useful at the end of this spreadsheet
1. Bottom-up beta estimator: will estimate your levered beta, given an unlevered beta (which you will have to
input.
2. Industry averages: Here, you can look up industry averages for variables such as beta, return on capital,
reinvestment rates and working capital.
Output           The output is contained in the valuation model worksheet.
n excel) and check

normalized to be
3-stage model.

and different inputs
e (3-stage model).
er you want the

h you will have to

urn on capital,
An apology: I apologize for the number of inputs that are required on this sheet. Many of the inputs are required only if you choo
If you have negative operating income, you will either have to normalize it to make it positive, or use the highgrowth.xls spreads
Master Input Sheet
Do you want to capitalize R&D expenses?                                No        ! Yes or No     Go to R&D Converter
Do you want to convert operating leases to debt?                       No        ! Yes or No     Go to Operating lease converter
Do you want to normalize operating income?                             No                        Go to Earnings Normalizer

Inputs
From Current Financials
Current EBIT =                                                    R\$ 19,421.00 ! If negative, go back and choose to normalize earnings
Current Interest Expense =                                        R\$ 1,756.00
Current Capital Spending                                          R\$ 22,033.75
Current Depreciation & Amort'n =                                  R\$ 6,478.00
Tax rate (for computing after-tax operating income) =               33.99%
Marginal tax rate =                                                 33.99%     Previous year-end
Current Revenues =                                               R\$ 284,349.00 R\$ 266,500.00
Current Non-cash Working Capital =                                R\$ 15,929.00
Chg. Working Capital =                                           -R\$ 26,590.00Previous year-end
Book Value of Debt =                                             R\$ 101,191.00 R\$ 60,130.00
Book Value of Equity =                                            R\$ 78,395.00 R\$ 68,698.00

Cash & Marketable Securities =                                    R\$ 26,644.00     R\$ 5,888.00
Value of Non-operating Assets =                                   R\$ 49,103.00    R\$ 24,770.00
Minority Interests (this is a liability) =                           \$0.00
Price to Book Ratio of sector with minority holdings =                1.20
If yes, enter the following:
Current Stock Price =                                              R\$ 166.15
Number of shares outstanding =                                       449.82
Market Value of Debt =                                            R\$ 80,933.23
If no, enter the following
Would you like to use the book value debt ratio?                       No
If no, enter the debt ratio to use in valuation                       35%

General Market Data
Long Term Treasury bond rate=                                        4.00%
Mature Market Equity Premium =                                       6.00%
Country Equity Risk Premium =                                        6.00%
Exchange Rate for fiscal year items (BR/\$) =                         R\$ 1.00        R\$ 1.00
Exchange Rate for currrent price conversions =                       R\$ 1.00
Ratings
Do you want to estimate the firm's synthetic rating =                  No        ! If yes, use the rating estimator worksheet that is attach
If yes, choose the type of firm                                         2
If not, what is the current rating of the firm?                       BBB
Enter the cost of debt associated with the rating =                  9.75%

Options
Do you have equity options (management options, warrants) outstanding? No
If yes, enter the number of options                                    2.23
Average strike price                                                    R\$ 13.85
Average maturity                                                           1.5
Standard Deviation in stock price                                         30%
P
Do you want to use the stock price to value the option or your estimated value?

Valuation Inputs
High Growth Period
Length of high growth period =                                                  5
Beta to use for high growth period for your firm=                             1.32
Lambda to use for your firm (for both high growth and stable growth) = 1.15
Do you want to keep the debt ratio computed from your inputs?                 Yes
If yes, the debt ratio that will be used to compute the cost of capital is 51.99%
7.00%
If no, enter the debt ratio that you would like to use in the high growth period
Do you want to keep the existing ratio of working capital to revenue?         Yes
If yes, the working capital as a percent of revenues will be                 5.60%
If no, enter the ratio of working capital to revenues to use in analysis      12%
Do you want to compute your growth rate from fundamentals?                    Yes
15%
If no, enter the expected growth rate in operating income for high growth period
If yes, the inputs to the fundamental growth calculation (based upon your inputs) are
Return on Capital =                                                         10.43%
Reinvestment Rate =                                                        129.14%
Do you want to change these inputs?                                           Yes
Return on Capital =                                                         10.43%
Reinvestment Rate =                                                         80.00%

No

Stable Growth Period
Growth rate during stable growth period =                                     4.00%
Beta to use in stable growth period =                                          1.20
Country Risk premium for equity in stable growth period =                     4.00%
Debt Ratio to use in stable growth period =                                  51.99%
Pre-tax cost of debt in stable growth period =                                9.00%
Tax Rate to use in stable growth period =                                    33.99%
To compute the reinvestment rate in stable growth, you have two options
Yes
Do you want to compute reinvestment needs in stable growth based on fundamentals?
If yes, enter the return on capital that the firm will have in stable growth 10.43%
If no, enter capital expenditure as % of depreciation in stable growth        120%  (in percent)
inputs are required only if you choose the appropriate option, though.
, or use the highgrowth.xls spreadsheet.

Go to R&D Converter
Go to Operating lease converter
Go to Earnings Normalizer

back and choose to normalize earnings.

0.14508
0.13074
Average maturity of debt =           3

R\$ 74,737.00

ating estimator worksheet that is attached
2003     2004         2005       2006       2007     Aggregate
EBIT (1-t)                  -R\$ 98       R\$ 91      R\$ 879    R\$ 1,269      R\$ 2,141
BV of debt                 R\$ 3,016     R\$ 3,554   R\$ 3,637    R\$ 187      R\$ 10,394
BV of equity               R\$ 3,768     R\$ 4,480   R\$ 4,863   R\$ 4,479     R\$ 17,590
Cash holdings              R\$ 3,659     R\$ 3,588   R\$ 4,479   R\$ 1,276     R\$ 13,002
Invested Capital           R\$ 3,125     R\$ 4,446   R\$ 4,021   R\$ 3,390     R\$ 14,982
ROIC                        -3.14%       2.05%     21.86%     37.45%       14.29%

Cap ex                        R\$ 374    R\$ 1,544    -R\$ 11    -R\$ 595       R\$ 1,312
Depreciation                  R\$ 358     R\$ 284     R\$ 330     R\$ 361       R\$ 1,333
Chg in WC                   -R\$ 1,440     R\$ 61     -R\$ 84     R\$ 325      -R\$ 1,138
Reinvestment                 R\$ 3,125   R\$ 1,321   -R\$ 425    -R\$ 631       R\$ 3,390
Reinvestment Rate          -3188.78%    1451.65%   -48.35%    -49.71%     158.30%
R\$ 535.37

15.79%
Cross holding                                   Value of holding
% of holdingTotal Market Cap              Book ValueP/Book (Sector)Estimated Market value
17.60%
Hyundai Merchant Marine              4806.00        845.86
Hyundai Motors         3.46%        17540.00        606.88
Hyundai Elevator       2.16%          688.00         14.86
Hyundai Corp           0.36%          602.00          2.17
Others                    ?             ?            84.20

Hyundai Oil Bank      19.87%        1825.77         362.78      329.80        1.10
Hyundai Samho         94.92%        2026.23        1923.30     1068.50        1.80
Hyundai Finance       67.49%         143.75          97.02       88.20        1.10
Value of Cross holdings                            3937.07
stimated Market value
Value Weight nlevered beta
Shipbuilding              8341       3.23     26941     63.73%         1.60
Offshore & Engineering 2563          1.97      5049     11.94%         1.44
Industrial plant          1200       1.55      1860      4.40%         1.29
Engine and Machinery      2252       1.36      3063      7.24%         1.21
Electro Electric System   1753        1.8      3155      7.46%         1.19
Construction Equipment 1823          1.21      2206      5.22%         1.29
42274       100.00%      1.49
Normalizing Earnings
Approach used to normalize earnings =                        1

If historical average,
Average Earnings before interest and taxes =                970

If historical average ROC,
Historical average pre-tax return on capital =              22%

If sector margin
Pre-tax Operating Margin for Sector =                      10.96%         ! Look at industry average

Normalized Earnings before interest and taxes =             \$970.00

Worksheet for normalization (Last 5 years of data)
-5               -4           -3                -2              -1         Total
Revenues                           6571            10231          9133        8342                9983       44260
EBIT                               1243             1740            794       546                   527       4850
Operating Margin                18.92%           17.01%          8.69%          6.55%            5.28%      10.96%

Net Cap ex                            282           -112         -27             151.76     196.02          490.78
Non-cash WC                         26.07         305.82      915.03            -222.74        1502.9      2527.08

Inventory                          367.38         682.72     1281.06        1121.56            2371.09
Accounts Rec                        74.48         149.74      537.37         314.02            1386.19
Other Current assets                34.23          57.17      174.73         291.92             474.46
Accounts Payable                   190.06         248.98      358.23         521.17             615.72
Other Current Liabilities          259.96         334.83       719.9        1429.07            2113.12

Net Cap ex as % of EBIT (1-t) 15.33%
Non-cash WC as % of Revenue 5.71%

Normalized reinvestment = \$2,984.36
R & D Converter
This spreadsheet converts R&D expenses from operating to capital expenses. It makes the appropriate adjustments to operating income, net
income, the book value of assets and the book value of equity.

Inputs
Over how many years do you want to amortize R&D expenses                              5        ! If in doubt, use the lookup table below
Enter the current year's R&D expense =                                             \$1,594.00 The maximum allowed is ten years
Enter R& D expenses for past years: the number of years that you will need to enter will be determined by the amortization period
Do not input numbers in the first column (Year). It will get automatically updated based on the input above.
Year       R& D Expenses
-1           1026.00    ! Year -1 is the year prior to the current year
-2            698.00    ! Year -2 is the two years prior to the current year
-3            399.00
-4            211.00
-5             89.00
0
0
0
0
0

Output
Year         R&D Expense           Unamortized portion         Amortization this year
Current         1594.00             1.00         1594.00
-1           1026.00             0.80          820.80                \$205.20
-2            698.00             0.60          418.80                \$139.60
-3            399.00             0.40          159.60                 \$79.80
-4            211.00             0.20           42.20                 \$42.20
-5             89.00             0.00            0.00                 \$17.80
0              0.00             0.00            0.00                  \$0.00
0              0.00             0.00            0.00                  \$0.00
0              0.00             0.00            0.00                  \$0.00
0              0.00             0.00            0.00                  \$0.00
0             0.00              0.00             0.00                 \$0.00
Value of Research Asset =                              \$3,035.40          \$484.60

Amortization of asset for current year =                 \$484.60

Adjustment to Operating Income =                       \$1,109.40 ! A positive number indicates an increase in operating income (add to report
Tax Effect of R&D Expensing                                \$377

Look Up Table for Amortization Periods
Industry Name Amortization Period
Aerospace/Defense        10                       Non-technological Service          2 years
Air Transport            10                       Retail, Tech Service               3 years
Aluminum                   5                      Light Manufacturing                5 years
Apparel                    3                      Heavy Manufacturing                10 years
Auto & Truck             10                       Research, with Patenting           10 years
Auto Parts (OEM)           5                      Long Gestation Period              10 years
Auto Parts (Replacement)     5
Bank                         2
Bank (Foreign)               2
Bank (Midwest)               2
Beverage (Alcoholic)         3
Beverage (Soft Drink)        3
Building Materials           5
Cable TV                    10
Cement & Aggregates         10
Chemical (Basic)            10
Chemical (Diversified)      10
Chemical (Specialty)        10
Coal/Alternate Energy        5
Computer & Peripherals       5
Computer Software & Svcs     3
Copper                       5
Diversified Co.              5
Drug                        10
Drugstore                    3
Educational Services         3
Electric Util. (Central)    10
Electric Utility (East)     10
Electric Utility (West)     10
Electrical Equipment        10
Electronics                  5
Entertainment                3
Environmental                5
Financial Services           2
Food Processing              3
Food Wholesalers             3
Foreign Electron/Entertn     5
Foreign Telecom.            10
Furn./Home Furnishings       3
Gold/Silver Mining           5
Grocery                      2
Healthcare Info Systems      3
Home Appliance               5
Homebuilding                 5
Hotel/Gaming                 3
Household Products           3
Industrial Services          3
Insurance (Diversified)      3
Insurance (Life)             3
Insurance (Prop/Casualty)    3
Internet                     3
Investment Co. (Domestic)    3
Investment Co. (Foreign)     3
Investment Co. (Income)      3
Machinery                   10
Manuf. Housing/Rec Veh       5
Maritime                    10
Medical Services             3
Medical Supplies             5
Metal Fabricating           10
Metals & Mining (Div.)       5
Natural Gas (Distrib.)      10
Natural Gas (Diversified)   10
Newspaper                    3
Office Equip & Supplies      5
Oilfield Services/Equip.     5
Packaging & Container        5
Paper & Forest Products     10
Petroleum (Integrated)       5
Petroleum (Producing)        5
Precision Instrument         5
Publishing                   3
R.E.I.T.                     3
Recreation                   5
Restaurant                   2
Retail (Special Lines)       2
Retail Building Supply       2
Retail Store                 2
Securities Brokerage         2
Semiconductor                5
Semiconductor Cap Equip      5
Shoe                         3
Steel (General)              5
Steel (Integrated)           5
Telecom. Equipment          10
Telecom. Services            5
Textile                      5
Thrift                       2
Tire & Rubber                5
Tobacco                      5
Toiletries/Cosmetics         3
Trucking/Transp. Leasing     5
Utility (Foreign)           10
Water Utility               10
priate adjustments to operating income, net

If in doubt, use the lookup table below
he maximum allowed is ten years
mined by the amortization period

increase in operating income (add to reported EBIT)
Operating Lease Converter
Inputs
Operating lease expense in current year =                            \$121.00
Operating Lease Commitments (From footnote to financials)
Year        Commitment ! Year 1 is next year, ….
1        \$     156.00
2        \$     143.00
3        \$     122.00
4        \$     109.00
5        \$      97.00
6 and beyond \$       448.00

Output
Pre-tax Cost of Debt =              9.75%      ! If you do not have a cost of debt, use the ratings estimator

From the current financial statements, enter the following
Reported Operating Income (EBIT) =                 \$19,421.00 ! This is the EBIT reported in the current income statement
Reported Debt =                                    \$80,933.23 ! This is the interest-bearing debt reported on the balance sheet

Number of years embedded in yr 6 estimate =           3        ! I use the average lease expense over the first five years
to estimate the number of years of expenses in yr 6
Converting Operating Leases into debt
Year       Commitment Present Value
1 \$        156.00      \$142.14
2 \$        143.00      \$118.72
3 \$        122.00        \$92.29
4 \$        109.00        \$75.13
5 \$         97.00        \$60.92
6 and beyond \$         149.33      \$234.26 ! Commitment beyond year 6 converted into an annuity for ten years
Debt Value of leases =        \$      723.46

Restated Financials
Depreciation on Operating Lease Asset =                                                \$90.43 ! I use straight line depreciation
Adjustment to Operating Earnings =                                                     \$70.54 ! PV of operating leases * Pre-tax cost of deb
Adjustment to Total Debt outstanding =                                          \$      723.46
nverter

current income statement
reported on the balance sheet

over the first five years
f expenses in yr 6

nnuity for ten years

I use straight line depreciation
PV of operating leases * Pre-tax cost of debt
EBIT (1 -t) =                      #########
Expected growth rate in perpetuity =   4.00%
Cost of capital =                     10.67%
Return on capital =                   10.67%

Reinvestment Rate =                 37.47%
Terminal Value =                 #########

Reinvestment Rate FCFF Terminal value
Growth Rate
0%          0.00%      ￦19,902 ￦186,451
1%          9.37%      ￦18,038 ￦186,451
2%         18.74%      ￦16,173 ￦186,451
3%         28.11%      ￦14,309 ￦186,451
4%         37.47%      ￦12,444 ￦186,451
5%         46.84%      ￦10,580 ￦186,451
Two-Stage FCFF Discount Model

Input Summary
Reais         Dollar
Normalized EBIT (before adjustments)R\$ 19,421.00    \$19,421.00
Adjusted EBIT =                     R\$ 19,421.00    \$19,421.00
Adjusted Interest Expense =          R\$ 1,756.00     \$1,756.00
Adjusted Capital Spending           R\$ 22,033.75    \$22,033.75
Adjusted Depreciation & Amort'n =    R\$ 6,478.00     \$6,478.00
Tax Rate on Income =                   33.99%         33.99%
Marginal tax rate =                    33.99%         33.99%
Current Revenues =                  R\$ 284,349.00   \$284,349.00
Current Non-cash Working Capital = R\$ 15,929.00     \$15,929.00
Chg. Working Capital =                R\$ 999.89      \$999.89
Adjusted Book Value of Debt =       R\$ 60,130.00    \$60,130.00
Adjusted Book Value of Equity =     R\$ 68,698.00    \$68,698.00
Invested Capital                    R\$ 122,940.00   \$122,940.00

Length of High Growth Period =            5           Forever
Growth Rate =                           8.34%          4.00%

51.99%
Debt Ratio used in Cost of Capital Calculation=       51.99%
Beta used for stock =                    1.32          1.20
Lambda used for stock =                  1.15          1.15
Riskfree rate =                         4.00%          4.00%
Mature Market Equity Premium =          6.00%          6.00%
Country Risk Premium =                  6.00%          4.00%
Cost of Debt =                          9.75%          9.00%
Tax Rate for computing income=         33.99%         33.99%
Marginal tax rate =                    33.99%         33.99%
Return on Capital =                    10.43%         10.43%
Reinvestment Rate =                    80.00%         38.36%

Page 19
Two-Stage FCFF Discount Model

Output from the program
Cost of Equity =                       18.82%
Equity/(Debt+Equity ) =                48.01%
After-tax Cost of debt =                6.44%
Debt/(Debt +Equity) =                  51.99%
Cost of Capital =                      12.38%
0.1042769
Intermediate Output
Expected Growth Rate                    8.34%
Working Capital as percent of revenues = 5.60%       (in percent)
The FCFF for the high growth phase are shown below (upto 10 years)
Current        1               2              3              4            5
Expected Growth Rate                    8.34%          8.34%          8.34%           8.34%        8.34%
Cumulated Growth                       108.34%        117.38%        127.17%         137.78%      149.28%
Reinvestment Rate                      80.00%          80.00%         80.00%         80.00%        80.00%
EBIT * (1 - tax rate)      \$12,820     \$13,889        \$15,048        \$16,303         \$17,663      \$19,137
- (CapEx-Depreciation)\$15,556          \$9,783         \$10,599        \$11,483         \$12,441      \$13,479
-Chg. Working Capital \$1,000           \$1,329          \$1,440         \$1,560         \$1,690        \$1,831
Free Cashflow to Firm (\$3,736)         \$2,778          \$3,010         \$3,261         \$3,533        \$3,827
Cost of Capital                        12.38%          12.38%         12.38%         12.38%        12.38%
Cumulated Cost of Capital               1.1238         1.2630         1.4193         1.5951        1.7926
Present Value                        \$2,472          \$2,383         \$2,297         \$2,215        \$2,135

Growth Rate in Stable Phase =           4.00%
Reinvestment Rate in Stable Phase =    38.36%
FCFF in Stable Phase =                \$12,267.86
Cost of Equity in Stable Phase =       15.80%
Equity/ (Equity + Debt) =              48.01%
AT Cost of Debt in Stable Phase =       5.94%

Page 20
Two-Stage FCFF Discount Model

Debt/ (Equity + Debt) =                   51.99%
Cost of Capital in Stable Phase =         10.67%
Value at the end of growth phase = \$183,809.17
Valuation
Present Value of FCFF in high growth phase =                          \$11,501.93
Present Value of Terminal Value of Firm =                             \$102,539.83
Value of operating assets of the firm =                               \$114,041.76
Value of Cash, Marketable Securities & Non-operating assets =         \$75,747.00
Value of Firm =                                                       \$189,788.76
Market Value of outstanding debt =                                    \$80,933.23
Minority Interest in consolidated holdings =                             \$0.00
Market Value of Equity =                                              \$108,855.53
Value of Equity in Options =                                             \$0.00
Value of Equity in Common Stock =                                     \$108,855.53
Market Value of Equity/share =                                         \$242.00
Market Value of Equity/share in BR =                                  R\$ 242.00

Year                          1                     2             3              4                 5
EBIT (1-t)          INR 13,889            INR 15,048    INR 16,303     INR 17,663        INR 19,137
- Reinvestment      INR 11,111            INR 12,038    INR 13,043     INR 14,131        INR 15,309
FCFF                  INR 2,778             INR 3,010     INR 3,261      INR 3,533         INR 3,827
INR
Present Value (@12.38%) 2,472              INR 2,383     INR 2,297      INR 2,215         INR 2,135

Page 21
Two-Stage FCFF Discount Model

Page 22
Two-Stage FCFF Discount Model

Terminal Year

\$19,902.24
\$6,683.26
\$951.12
\$12,267.86

Page 23
Valuing Options or Warrants
Enter the current stock price =                        \$166.15
Enter the strike price on the option =                  \$13.85
Enter the expiration of the option =                        1.5
Enter the standard deviation in stock prices =          30.00% (volatility)
Enter the annualized dividend yield on stock =           0.00%
Enter the treasury bond rate =                           4.00%
Enter the number of warrants (options) outstanding =       2.23
Enter the number of shares outstanding =                 449.82

Do not input any numbers below this line
VALUING WARRANTS WHEN THERE IS DILUTION
Stock Price=                         166.15 # Warrants issued=                   2.23
Strike Price=                          13.85 # Shares outstanding=                450
Adjusted S =                  166.0853361 T.Bond rate=                        4.00%
Adjusted K =                           13.85 Variance=                        0.0900
Expiration (in years) =                  1.5 Annualized dividend yield=       0.00%

d1 =             7.108191966
N (d1) =                   1

d2 =             6.740768505
N (d2) =                   1

Value per option =                   \$153.04
Value of all options outstanding =                     \$341.28
Bottom-up Beta Calculator
Unlevered beta for sector =                   0.77 ! Look up industry averages

Output
Firm's Current market value D/E ratio =   108.29% ! Reverted back to conventional debt to equity ratio
Firm's Current tax rate =                  33.99%

Bottom-up beta for firm =                     1.32
debt to equity ratio

0.1760875
Inputs for synthetic rating estimation
Enter the type of firm =                      2 (Enter 1 if large manufacturing firm, 2 if smaller or riskier firm, 3 if financial service firm)
Enter current Earnings before interest and taxes (EBIT) =                          \$19,421.00 (Add back only long term interest expense fo
Enter current interest expenses =                                                   \$1,756.00 (Use only long term interest expense for fina
Enter current long term government bond rate =                                           4.00%
Output
Interest coverage ratio =                           11.06
Estimated Bond Rating =                               AA
Estimated Cost of Debt =                            5.75%

For large manufacturing firms                                                    For financial service firms
If interest coverage ratio is                                                   If long term interest coverage ratio is
>              ≤ to     Rating is           Spread is                       greater than         ≤ to
-100000         0.199999       D                 20.00%                           -100000        0.049999
0.2         0.649999        C                15.00%                             0.05         0.099999
0.65         0.799999       CC                12.00%                              0.1         0.199999
0.8         1.249999      CCC                10.00%                              0.2         0.299999
1.25         1.499999       B-                 8.50%                              0.3         0.399999
1.5         1.749999        B                 7.25%                              0.4         0.499999
1.75         1.999999       B+                 6.00%                              0.5         0.599999
2         2.2499999      BB                  5.00%                              0.6         0.749999
2.25          2.49999      BB+                 4.25%                             0.75         0.899999
2.5         2.999999      BBB                 3.50%                              0.9         1.199999
3          4.249999       A-                 3.00%                              1.2          1.49999
4.25         5.499999       A                  2.50%                              1.5          1.99999
5.5         6.499999       A+                 2.25%                               2           2.49999
6.5         8.499999      AA                  1.75%                              2.5          2.99999
8.50          100000      AAA                  1.25%                               3            100000

For smaller and riskier firms
If interest coverage ratio is
greater than         ≤ to         Rating is       Spread is
-100000         0.499999           D             20.00%
0.5         0.799999           C             15.00%
0.8         1.249999          CC             12.00%
1.25         1.499999         CCC             10.00%
1.5         1.999999           B-             8.50%
2          2.499999           B              7.25%
2.5         2.999999          B+              6.00%
3          3.499999          BB              5.00%
3.5        3.9999999         BB+              4.25%
4          4.499999         BBB              3.50%
4.5         5.999999           A-             3.00%
6          7.499999           A              2.50%
7.5         9.499999          A+              2.25%
9.5        12.499999          AA              1.75%
12.5          100000          AAA              1.25%
or riskier firm, 3 if financial service firm)
Add back only long term interest expense for financial firms)
Use only long term interest expense for financial firms)

est coverage ratio is
Rating is             is
D           20.00%        15.00%
C           15.00%        10.00%
CC          12.00%         8.00%
CCC           10.00%         6.00%
B-           8.50%         5.00%
B            7.25%         4.50%
B+           6.00%         4.00%
BB            5.00%         3.00%
BB+            4.25%         2.50%
BBB            3.50%         1.50%
A-           3.00%         1.30%
A            2.50%         1.20%
A+           2.25%         1.15%
AA            1.75%         0.90%
AAA            1.25%         0.70%
Industry Name                          L                        Std
Number of firms evered Beta Unlevered Beta Dev: Equity   Market D/E            ROE
Market Debt/Capital
Advertising                   30            1.43        0.87         80.69%          126.31%    55.81% 21.54%
Aerospace/Defense             66            1.27        1.20         47.75%           27.21%    21.39% 25.52%
Air Transport                 44            1.15        0.86         60.46%           78.21%    43.89% 31.77%
Apparel                       53            1.14        0.93         68.33%           44.32%    30.71% 16.38%
Auto & Truck                  20            1.49        0.76         34.92%          183.75%    64.76% 85.35%
Auto Parts                    54            1.56        1.10         52.04%           94.19%    48.50% 19.79%
Bank                         477            0.71        0.47         27.49%           91.52%    47.79% 14.58%
Bank (Canadian)               8             0.86        0.83         17.85%           10.36%     9.39%    23.19%
Bank (Midwest)                39            0.91        0.66         27.13%           68.98%    40.82% 17.19%
Beverage                      41            0.95        0.85         54.53%           19.02%    15.98% 24.85%
Biotechnology                108            1.25        1.27         69.85%            9.98%     9.08%    22.16%
Building Materials            52            1.39        0.80         61.96%          103.11%    50.76% 13.03%
Cable TV                      25            1.56        0.95         44.91%           88.77%    47.03%     7.00%
Canadian Energy               12            1.22        0.99         33.84%           35.70%    26.31% 20.83%
Chemical (Basic)              19            1.26        1.10         37.09%           29.11%    22.55% 25.33%
Chemical (Diversified)        33            1.21        1.10         39.47%           26.70%    21.07% 26.45%
Chemical (Specialty)          88            1.18        0.98         57.61%           35.74%    26.33% 18.88%
Coal                          18            1.98        1.43         49.41%           48.02%    32.44% 13.96%
Computer Software/Svcs       322            1.22        1.33         71.38%            7.77%     7.21%    47.49%
Computers/Peripherals        125            1.29        1.39         82.96%           18.36%    15.51% 49.14%
Diversified Co.              113            1.25        0.60         48.51%          160.98%    61.68% 29.12%
Drug                         342            1.16        1.14         96.99%           14.51%    12.67% 26.23%
E-Commerce                    54            1.50        1.76         57.18%           11.43%    10.26% 10.10%
Educational Services          34            0.84        0.89         52.81%            2.22%     2.18%    48.89%
Electric Util. (Central)      24            0.82        0.49         21.09%          107.83%    51.88% 11.46%
Electric Utility (East)       26            0.74        0.50         22.24%           73.30%    42.30% 13.38%
Electric Utility (West)       16            0.79        0.50         18.64%           90.70%    47.56% 10.89%
Electrical Equipment          83            1.37        1.26         57.31%           23.53%    19.05% 24.82%
Electronics                  173            1.31        1.23         79.26%           45.62%    31.33% 10.63%
Entertainment                 84            1.66        1.09         50.24%           79.23%    44.21%     8.08%
Entertainment Tech            33            1.45        2.33         70.79%           11.54%    10.35%    -5.09%
Environmental                 79            1.11        0.80         87.19%           49.86%    33.27% 14.34%
Financial Svcs. (Div.)       296            1.27        0.45         62.78%          261.38%    72.33% 14.91%
Food Processing              109            0.80        0.65         40.11%           35.15%    26.01% 20.98%
Food Wholesalers              18            0.73        0.54         46.75%           59.50%    37.30% 15.36%
Foreign Electronics           10            1.18        1.40         25.56%           42.29%    29.72% 12.30%
Furn/Home Furnishings         34            1.29        0.94         43.85%           65.75%    39.67% 12.64%
Grocery                       14            0.84        0.78         27.93%           13.91%    12.21% 17.58%
Healthcare Information        29            1.05        1.04         50.75%           19.87%    16.58% 43.47%
Heavy Construction            14            1.48        1.74         42.91%            9.49%     8.67%    21.05%
Homebuilding                  32            1.36        0.65         44.28%          162.15%    61.85% -63.59%
Hotel/Gaming                  68            1.70        0.84         64.47%          142.62%    58.78% 17.10%
Household Products            26            1.08        0.95         37.34%           23.21%    18.84% 21.67%
Human Resources               31            1.44        1.61         43.81%           18.42%    15.55% 16.30%
Industrial Services          167            1.20        0.98         63.50%           43.98%    30.55% 19.74%
Information Services          34            1.22        1.24         37.26%           21.88%    17.95% 32.04%
Insurance (Life)              35            1.17        1.27         50.74%           21.71%    17.84% 20.91%
Insurance (Prop/Cas.)         78            0.91        0.92         26.47%            1.89%     1.85%    20.44%
Internet                     208            1.41        1.66         86.31%            4.07%     3.91%    25.60%
Investment Co.                17            0.83        0.90         18.96%           14.84%    12.92% 647.73%
Investment Co.(Foreign)       16            1.31        1.36         28.87%            5.16%     4.90%    10.46%
Machinery                 124   1.39   1.08   48.66%    55.77%   35.80%   23.51%
Manuf. Housing/RV          18   1.32   1.38   47.67%    50.13%   33.39%    8.90%
Maritime                   56   1.30   0.52   37.08%   185.73%   65.00%   19.95%
Medical Services          160   1.10   0.90   86.84%    54.66%   35.34%   24.56%
Medical Supplies          252   1.17   1.13   72.38%    13.28%   11.72%   23.17%
Metal Fabricating          35   1.56   1.55   60.00%    25.44%   20.28%   22.01%
Metals & Mining (Div.)     78   1.69   1.48   97.21%    21.94%   17.99%   30.86%
Natural Gas (Div.)         34   1.20   0.85   35.65%    58.57%   36.94%   14.31%
Natural Gas Utility        25   0.69   0.43   25.71%    85.33%   46.04%   12.36%
Newspaper                  16   1.16   0.72   34.32%    86.43%   46.36%   13.96%
Office Equip/Supplies      26   1.11   0.84   42.36%    60.35%   37.64%   19.85%
Oil/Gas Distribution       19   0.89   0.53   36.90%    81.95%   45.04%   15.81%
Oilfield Svcs/Equip.      112   1.56   1.27   46.34%    42.35%   29.75%   25.10%
Packaging & Container      33   1.27   0.81   39.90%    84.83%   45.90%   15.41%
Paper/Forest Products      38   1.20   0.64   48.42%   118.10%   54.15%    5.75%
Petroleum (Integrated)     25   1.34   1.30   37.35%    14.67%   12.79%   26.14%
Petroleum (Producing)     188   1.24   0.97   78.27%    37.57%   27.31%   16.75%
Pharmacy Services          19   0.94   0.81   30.96%    23.50%   19.03%   11.99%
Power                      66   1.63   0.95   71.09%   107.88%   51.90%   19.05%
Precious Metals            75   1.41   1.37   67.33%    11.77%   10.53%    3.32%
Precision Instrument       90   1.47   1.59   53.96%    22.65%   18.47%   15.26%
Property Management        17   1.38   0.46   32.79%   282.91%   73.88%    9.58%
Publishing                 27   1.24   0.62   39.28%   137.13%   57.83%   -66.38%
R.E.I.T.                  144   1.35   0.92   36.52%    53.19%   34.72%    8.95%
Railroad                   15   1.25   0.99   30.42%    41.53%   29.34%   15.12%
Recreation                 64   1.41   1.01   57.75%    62.58%   38.49%   14.49%
Reinsurance                11   0.91   1.00   22.33%    11.37%   10.21%   17.04%
Restaurant                 68   1.26   1.09   48.95%    24.97%   19.98%   29.70%
Retail (Special Lines)    155   1.26   1.22   57.15%    26.07%   20.68%   23.03%
Retail Automotive          16   1.31   0.93   35.23%    66.88%   40.08%   16.17%
Retail Building Supply     8    1.01   0.86   24.82%    26.35%   20.85%   21.07%
Retail Store               38   1.01   0.86   40.30%    30.29%   23.25%   19.89%
Securities Brokerage       32   1.37   0.37   51.25%   462.27%   82.22%   -11.10%
Semiconductor             122   1.81   2.11   59.20%    13.32%   11.75%   22.18%
Semiconductor Equip        16   1.78   2.20   43.35%    13.62%   11.98%   32.37%
Shoe                       19   1.23   1.39   39.32%     3.66%    3.53%   28.40%
Steel (General)            20   1.71   1.53   44.25%    32.18%   24.34%   27.03%
Steel (Integrated)         14   1.96   1.54   49.03%    64.96%   39.38%   20.96%
Telecom. Equipment        110   1.49   1.87   75.07%    12.71%   11.28%   35.37%
Telecom. Services         140   1.43   1.06   82.14%    51.32%   33.91%   16.18%
Thrift                    234   0.66   0.69   31.62%     9.71%    8.85%    6.69%
Tobacco                    12   0.71   0.69   29.69%     8.84%    8.12%   70.43%
Toiletries/Cosmetics       23   0.95   0.79   51.70%    38.50%   27.80%   98.41%
Trucking                   33   1.17   0.66   38.85%   126.80%   55.91%   12.03%
Utility (Foreign)          5    1.23   0.85   28.01%    62.82%   38.58%    3.89%
Water Utility              16   0.86   0.57   35.87%    82.79%   45.29%    0.63%
Wireless Networking        57   1.54   1.28   58.41%    36.37%   26.67%    7.85%
Public/Private Equity      10   2.08   0.48   45.59%   391.15%   79.64%   17.72%
Funeral Services           6    1.41   1.02   29.93%    67.25%   40.21%   15.04%
Market                   6870   1.19   0.93   56.57%    48.81%   32.80%    20.64%
ROC             Effective Tax Rate              After-tax Operating Margin
Pre-tax Operating Margin       Net Margin
13.01%            18.90%       17.93%           11.95%                   2.26%
19.53%            24.10%       12.31%            8.31%                   3.57%
22.00%            23.00%       13.57%           11.05%                   0.17%
18.05%            17.21%       12.98%           10.18%                   2.69%
18.80%            24.36%       13.10%            7.96%                   0.57%
21.81%            19.61%        7.65%            5.56%                   0.90%
NA             25.91%          NA               NA                      NA
NA             15.08%          NA               NA                      NA
NA             26.81%          NA               NA                      NA
18.98%            16.46%       20.00%           14.75%                   5.77%
14.78%             3.59%       26.91%           16.90%                   8.33%
11.35%            18.44%       14.04%           10.51%                   2.23%
10.91%            22.97%       34.41%           19.49%                   3.28%
25.35%            27.82%       40.66%           28.84%                   9.48%
21.96%            19.29%       15.05%           11.97%                   6.40%
23.67%            25.47%       19.87%           14.14%                   5.55%
17.93%            18.99%       14.08%            9.75%                   2.69%
20.13%            10.52%       18.05%           15.76%                   4.53%
36.64%            12.65%       24.51%           17.24%                   8.24%
32.96%             9.90%       11.61%            8.78%                   3.55%
10.79%            20.23%       22.39%           17.93%                   4.85%
22.57%             5.96%       30.15%           22.65%                   8.38%
12.54%            13.09%       12.69%            8.76%                   3.38%
46.84%            20.80%       17.36%           11.69%                   5.63%
10.28%            33.02%       21.86%           14.67%                   3.61%
11.64%            32.09%       25.85%           17.24%                   4.49%
11.52%            30.47%       24.38%           16.51%                   3.72%
20.50%            14.23%       15.75%           11.48%                   4.96%
13.01%            11.87%        7.57%            5.61%                   1.40%
9.98%            17.17%       23.75%           15.00%                   3.66%
4.51%            13.67%        3.93%            1.77%                   -1.45%
13.67%            15.45%       21.85%           13.42%                   3.48%
12.33%            17.93%       85.68%           76.59%                  -22.60%
15.64%            21.67%       11.98%            8.59%                   2.98%
14.62%            27.39%        5.66%            3.75%                   0.94%
16.90%            37.04%       13.50%            7.43%                   1.67%
13.85%            23.99%       10.51%            7.04%                   1.43%
17.38%            32.96%        5.87%            3.81%                   1.06%
24.69%            16.47%       20.66%           14.16%                   7.79%
18.45%            34.26%        5.98%            3.85%                   2.23%
-23.17%             6.13%       -16.16%         -16.36%                  -10.34%
10.83%            17.97%       22.98%           15.26%                   3.26%
17.10%            29.87%       21.24%           15.33%                   5.90%
17.34%            29.77%        5.69%            3.31%                   1.20%
18.18%            19.26%       11.76%            8.27%                   2.03%
21.20%            20.44%       21.26%           14.72%                   5.92%
NA             25.86%          NA               NA                      NA
NA             20.26%          NA               NA                      NA
26.46%             7.50%       19.23%           13.94%                   6.53%
NA              0.00%          NA               NA                      NA
NA              2.11%          NA               NA                      NA
17.21%   22.71%   13.72%    9.49%    3.49%
9.47%   14.98%    3.83%    2.37%   -1.61%
12.18%    7.08%   30.66%   29.09%   13.32%
18.25%   18.36%   12.69%    8.16%    2.38%
20.34%   12.51%   11.53%    8.54%    3.60%
21.33%   20.43%   14.65%   10.22%    2.71%
27.62%    9.29%   36.00%   25.33%    5.94%
15.08%   24.19%   34.06%   23.75%    9.41%
12.02%   24.52%   14.77%   10.36%    2.30%
11.21%   23.53%   21.90%   16.06%    2.18%
15.81%   22.76%    9.94%    6.92%    1.74%
11.69%    9.48%   15.24%   12.24%    4.25%
20.50%   22.07%   26.36%   19.65%    8.24%
17.06%   24.65%   13.39%   10.04%    1.97%
11.21%   13.66%   12.24%   10.31%    0.80%
25.61%   33.79%   17.96%   10.45%    5.11%
23.41%   13.98%   38.57%   26.43%    6.99%
12.17%   21.13%    6.41%    4.13%    1.43%
11.71%    6.25%   18.09%   12.74%    2.50%
8.54%    5.94%   32.80%   23.79%    9.32%
16.76%   14.38%   16.31%   12.59%    4.11%
9.81%   19.27%   35.51%   27.99%    4.02%
20.12%   20.73%   17.26%   10.27%    1.30%
8.49%    1.21%   18.11%   16.08%   61.19%
13.91%   30.62%   31.92%   20.60%    7.24%
14.02%   19.12%   19.56%   15.62%    4.49%
NA     8.87%      NA       NA       NA
22.15%   20.10%   16.35%   13.16%    4.10%
22.65%   23.08%    9.37%    6.06%    1.82%
11.67%   34.23%    6.72%    4.31%    1.26%
17.82%   28.12%   11.59%    7.31%    2.26%
15.19%   25.68%    6.93%    4.47%    1.56%
15.35%   22.16%   33.95%   25.61%   -1.40%
28.67%   10.48%   27.73%   21.97%    4.69%
29.91%   22.03%   23.75%   17.41%    4.57%
28.46%   30.35%   12.52%    8.44%    1.68%
21.54%   29.15%   12.53%    8.29%    4.36%
19.41%   29.90%   18.78%   14.41%    5.67%
26.58%   12.08%   13.97%   10.62%    2.81%
22.22%   15.90%   39.80%   28.38%    3.45%
NA    17.04%      NA       NA       NA
32.64%   20.25%    9.68%    6.66%    3.00%
23.11%   23.28%   12.03%    7.97%    3.04%
12.67%   33.19%   13.28%    8.54%    0.95%
9.93%   15.01%   15.29%    9.47%    0.01%
8.11%   35.46%   40.45%   25.93%    3.63%
10.21%   14.08%   18.28%   11.63%    3.52%
6.46%    6.70%   53.29%   47.57%   22.90%
11.67%   33.26%   20.82%   13.16%    2.96%
17.73%   16.67%   20.77%   14.61%    3.44%
Non-cash WC/ Revenues
Cap Ex/ Depreciation                                 Sales/Capital
Payout RatioReinvestment Rate             EV/Sales
66.89%        -15.13%    7.17%        -1.16%         1.09           0.94
115.91%         -0.61%   12.42%        -0.05%         2.35           0.73
158.61%         -8.01%    9.33%        13.68%         1.99           0.65
141.22%        19.55%     8.42%        -0.71%         1.77           0.64
90.69%        13.27%     8.71%         6.48%         2.36           0.51
94.73%         6.44%    17.95%        -4.20%         3.92           0.29
NA             NA     36.07%         0.00%          NA             NA
NA             NA     46.75%         0.00%          NA             NA
NA             NA     54.64%         0.00%          NA             NA
115.01%         5.16%    23.38%         5.26%         1.29           1.99
128.27%         4.60%     0.49%         6.79%         0.87           5.71
130.86%         6.64%    14.30%         9.21%         1.08           0.85
102.79%        -10.57%   11.78%         3.61%         0.56           2.20
211.40%         -5.37%   11.45%        28.10%         0.88           1.61
109.34%        11.16%    16.37%        -6.47%         1.84           0.88
118.69%        13.88%    19.75%        -9.92%         1.67           1.15
109.81%        11.64%    17.73%        -2.32%         1.84           0.90
139.17%         4.69%    20.71%         5.35%         1.28           1.26
89.63%         -6.37%   10.17%        -0.96%         2.12           1.93
95.27%         -0.69%    6.33%        -1.84%         3.75           0.70
146.86%        91.24%    20.12%       -12.75%         0.60           1.96
61.72%        10.48%    25.99%        -5.83%         1.00           2.63
146.25%        -14.07%    1.20%         8.42%         1.43           1.86
106.44%        -11.48%    2.31%         5.63%         4.01           2.75
218.97%         5.39%    31.65%        31.79%         0.70           1.65
206.28%         5.64%    29.52%        25.82%         0.68           1.93
218.34%         1.50%    24.77%        34.95%         0.70           1.57
126.55%        12.14%    13.79%        -2.87%         1.79           1.00
122.53%        12.65%     7.35%         0.49%         2.32           0.32
91.06%         -0.16%   11.91%        -1.55%         0.67           1.27
66.84%         -6.03%      NA         51.10%         2.55           0.85
99.42%         3.48%    22.11%        -4.43%         1.02           1.73
258.58%        28.75%    22.83%      -612.73%         0.16           6.96
123.88%         6.15%    14.65%        -7.14%         1.82           1.01
122.12%         0.94%    11.15%         4.36%         3.90           0.36
87.71%         8.53%     9.77%        -6.57%         2.27           0.32
84.73%        13.15%    13.14%        -0.04%         1.97           0.45
165.00%         -0.29%    6.47%        18.50%         4.56           0.79
84.61%         4.58%     3.84%        -6.78%         1.74           2.08
142.75%         1.17%     3.83%        -4.58%         4.80           0.49
72.88%        57.77%       NA            NA          1.42           0.58
330.71%         -3.58%   10.47%        52.78%         0.71           1.50
94.67%         5.69%    21.58%        -2.39%         1.12           2.05
81.85%         5.48%     7.33%        -7.15%         5.24           0.23
134.26%         6.88%     5.16%         7.60%         2.20           0.71
98.29%         -1.64%    5.47%         0.90%         1.44           1.68
192725.00%          NA     23.35%         0.00%          NA             NA
38706.98%          NA     14.29%        -0.07%          NA             NA
133.62%         -6.83%    0.20%         6.25%         1.90           2.22
20.00%           NA        NA            NA           NA             NA
84.21%           NA     36.72%        -1.55%          NA             NA
134.95%    16.14%    10.21%    -1.51%   1.81   0.70
81.33%     5.71%     9.05%     9.17%   3.99   0.17
523.30%     7.18%    17.67%    69.70%   0.42   2.23
146.47%    -6.66%     0.86%     5.72%   2.24   0.59
98.75%     6.59%    15.25%    -3.33%   2.38   1.08
195.35%    10.84%    10.49%     8.66%   2.09   0.59
251.65%     5.81%    10.00%    10.91%   1.09   1.49
281.53%    -3.94%    13.80%    50.53%   0.63   2.00
146.56%     5.17%    30.14%     8.35%   1.16   1.09
71.55%     3.05%     9.12%    -4.55%   0.70   1.12
83.36%     9.33%    10.66%    -5.75%   2.28   0.52
373.42%    -0.45%    39.70%    47.94%   0.95   1.36
268.73%    12.70%     6.06%    18.86%   1.04   1.24
95.74%     5.96%    12.39%    -3.29%   1.70   0.72
90.62%    11.37%    28.92%     0.62%   1.09   0.74
186.98%     2.22%    14.04%    12.52%   2.45   0.65
291.48%     2.89%     5.13%    42.65%   0.89   1.29
163.33%     5.33%     6.20%     2.63%   2.95   0.56
197.18%     6.96%     0.19%    12.47%   0.92   1.54
230.19%     0.02%    19.95%    51.75%   0.36   4.72
51.15%    10.13%     4.96%   -14.88%   1.33   0.92
608.41%   -17.86%    23.90%    94.40%   0.35   2.90
89.69%     4.17%    80.61%    -1.09%   1.96   0.89
607.00%    -4.12%   115.46%   242.89%   0.53   4.05
190.87%    -4.11%    14.10%    18.83%   0.68   2.03
201.19%    -0.80%    21.67%    20.73%   0.90   1.16
NA         NA     12.85%     0.00%    NA     NA
178.56%    -5.11%    21.18%    14.97%   1.68   1.57
139.68%     6.30%     9.70%     9.60%   3.74   0.40
233.04%    12.86%     1.96%    24.14%   2.70   0.47
242.53%     5.07%    14.55%    23.42%   2.44   0.72
202.23%     1.53%    11.18%    22.28%   3.40   0.54
166.76%   120.39%    28.02%   140.87%   0.60   1.82
110.68%     8.97%    21.82%     1.50%   1.30   1.31
95.15%    15.62%     5.01%     5.06%   1.72   0.81
135.60%    16.15%    11.89%     1.42%   3.37   0.84
187.15%    14.33%     9.43%   -13.36%   2.60   0.55
124.02%    15.49%     6.35%    -8.04%   1.35   0.59
71.60%     0.25%    13.06%    -7.29%   2.50   0.90
190.13%   -10.85%    21.11%    -1.41%   0.78   1.69
NA         NA     64.16%   422.33%    NA     NA
331.23%     0.78%    32.09%    24.30%   4.90   1.47
117.56%     8.54%    16.72%     0.78%   2.90   0.98
682.72%     5.27%     8.06%   170.96%   1.48   0.75
143.73%     4.62%     0.00%     0.00%   1.05   0.90
262.28%     1.68%   274.15%    18.42%   0.31   3.80
82.96%     6.91%     1.53%   -32.77%   0.88   2.36
15.66%    33.11%    23.46%     0.73%   0.14   4.01
116.53%     0.96%    17.83%     1.70%   0.89   1.40
158.90%     9.07%    16.22%   -30.90%   1.21   1.28

```
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
 views: 7 posted: 9/15/2012 language: Unknown pages: 34