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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.
What the model does
This 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.

e worksheets.

and different inputs


e (3-stage model).
r 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 cho
If you have negative operating income, you will either have to normalize it to make it positive, or use the highgrowth.xls spread

Master Input Sheet


Do you want to capitalize R&D expenses?
Do you want to convert operating leases to debt?
Do you want to normalize operating income?

No
No
Yes

! Yes or No
! Yes or No

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

Inputs
From Current Financials
Current EBIT =
Current Interest Expense =
Current Capital Spending
Current Depreciation & Amort'n =
Tax rate (for computing after-tax operating income) =
Marginal tax rate =
Current Revenues =
Current Non-cash Working Capital =
Chg. Working Capital =
Book Value of Debt =
Book Value of Equity =
Cash & Marketable Securities =
Value of Non-operating Assets =
Minority Interests (this is a liability) =
Price to Book Ratio of sector with minority holdings =
Market Data for your firm
Is your stock currently traded?
If yes, enter the following:
Current Stock Price =
Number of shares outstanding =
Market Value of Debt =
If no, enter the following
Would you like to use the book value debt ratio?
If no, enter the debt ratio to use in valuation
General Market Data
Long Term Treasury bond rate=
Mature Market Equity Premium =
Country Equity Risk Premium =
Exchange Rate for fiscal year items (BR/$) =
Exchange Rate for currrent price conversions =
Ratings
Do you want to estimate the firm's synthetic rating =
If yes, choose the type of firm
If not, what is the current rating of the firm?
Enter the cost of debt associated with the rating =

###
! If negative, go back and choose to normalize earning
INR 6,737.00
###
INR 8,701.00
21.00%
33.99%
Previous year-end
###
###
-INR 4,085.00
INR 2,732.00Previous year-end
###
###
###
###
###

###

###
INR 0.00

###

2.10
Yes

Average maturity of debt =

INR 780.50
413.05
###
No
35%

5.00%
4.50%
4.50%
R$ 1.00
R$ 1.00
No
2
B+
12.25%

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

R$ 1.00

! If yes, use the rating estimator worksheet that is attac

Standard Deviation in stock price


30%
Do you want to use the stock price to value the option or your estimated value?
P
Valuation Inputs
High Growth Period
Length of high growth period =
10
Beta to use for high growth period for your firm=
1.2
Lambda to use for your firm (for both high growth and stable growth) = 0.8
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
25.30%
If no, enter the debt ratio that you would like to use in the high growth period
7.00%
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
-1.54%
If no, enter the ratio of working capital to revenues to use in analysis
4.50%
Do you want to compute your growth rate from fundamentals?
yes
If no, enter the expected growth rate in operating income for high growth period
12%
If yes, the inputs to the fundamental growth calculation (based upon your inputs) are
Return on Capital =
17.16%
Reinvestment Rate =
170.61%
Do you want to change these inputs?
Yes
Return on Capital =
17.16%
Reinvestment Rate =
70.00%
Do you want me to gradually adjust your high growth inputs in the second half?
Yes
Stable Growth Period
Growth rate during stable growth period =
5.00%
Beta to use in stable growth period =
1.00
Country Risk premium for equity in stable growth period =
3.00%
Debt Ratio to use in stable growth period =
25.30%
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
Do you want to compute reinvestment needs in stable growth based on fundamentals?
Yes
If yes, enter the return on capital that the firm will have in stable growth 12.00%
If no, enter capital expenditure as % of depreciation in stable growth
120%
(in percent)

e inputs are required only if you choose the appropriate option, though.
e, 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.

Average maturity of debt =

0.14508
0.13074
3

rating estimator worksheet that is attached

Revenues
EBIT
Pre-tax Oper Mgn

2005
192792
17950
9.31%

EBIT (1-t)
14181
BV of debt (start)
33621
BV of equity (start)
37019
Cash holdings
5546
Invested Capital R$ 65,094
ROIC
21.78%

2006
231523
22526
9.73%

2007
314044
30011
9.56%

2008
342586
30984
9.04%

2009
Aggregate
747837
###
42684
R$ 144,155
5.71%
7.88%

17796
23709
24477
33720
R$ 27,142
R$ 63,293
R$ 97,479 R$ 157,163
R$ 44,602
R$ 63,054
R$ 79,717
R$ 91,658
R$ 20,209
R$ 4,838
R$ 6,998
R$ 6,450
R$ 51,535 R$ 121,509 R$ 170,198 R$ 242,371
34.53%
19.51%
14.38%
13.91%

Cap ex
8740 R$ 12,592
R$ 27,588
R$ 52,804
Acquisitions
5844 R$ 1,321
R$ 891
R$ 9,937
Depreciation
5377 R$ 6,274
R$ 6,850
R$ 7,826
Chg in WC
5628 R$ 23,450
R$ 41,370 -R$ 20,422
Reinvestment
R$ 14,835
R$ 31,089
R$ 62,999
R$ 34,493
Reinvestment Rate 104.62%
174.70%
265.72%
140.92%
Reinvestment Rate without
63.40%
acquisitions
167.28%
261.96%
100.32%

R$ 113,882
R$ 378,698
R$ 316,050
R$ 44,041
R$ 650,707
17.50%

R$ 99,708
R$ 192,692
R$ 553
R$ 12,702
R$ 25,072
R$ 46,022
R$ 13,450
R$ 57,848
R$ 88,639
R$ 217,220
262.86%
190.74%
261.22%
179.59%

Investment
Number of units
Book Value (in millions)
Current market Market
price Value (in millions)
a. Investments with market value
Tata Steel
21440882
2699
633 13572.08
Tata Chemicals
70249
2.4
346 24.30615

Total
b. Investments without quoted market price
All other investments

2701.4

### NA

13596.38

###

Business
Revenues
Shipbuilding
8341
Offshore & Engineering 2563
Industrial plant
1200
Engine and Machinery
2252
Electro Electric System 1753
Construction Equipment 1823

EV/Sales
3.23
1.97
1.55
1.36
1.8
1.21

Value
26941
5049
1860
3063
3155
2206
42274

Value WeightUnlevered beta


63.73%
1.60
11.94%
1.44
4.40%
1.29
7.24%
1.21
7.46%
1.19
5.22%
1.29
100.00%
1.49

Normalizing Earnings
Approach used to normalize earnings =

If historical average,
Average Earnings before taxes =

INR 19,738

If historical average ROC,


Historical average pre-tax return on capital =

22%

If sector margin
Pre-tax Operating Margin for Sector =

7.04%

Normalized Earnings before interest and taxes =

! Look at industry average

$25,464.20

Worksheet for normalization (Last 5 years of data)


-5
-4
-3
-2
-1
Revenues
INR 206,487 INR 242,905 INR 320,648 INR 335,771 INR 295,252
EBT
INR 16,519 INR 20,534 INR 25,732 INR 25,765
INR 10,138
EBT Margin
8.00%
8.45%
8.02%
7.67%
3.43%
Net Cap ex
Non-cash WC
Inventory
Accounts Rec
Other Current assets
Accounts Payable
Other Current Liabilities

282
26.07

-112
305.82

-27
915.03

367.38
74.48
34.23
190.06
259.96

682.72
149.74
57.17
248.98
334.83

1281.06
537.37
174.73
358.23
719.9

Net Cap ex as % of EBIT (1-t) 0.75%


Non-cash WC as % of Revenue 0.18%
Normalized reinvestment =

$39.62

151.76
-222.74
1121.56
314.02
291.92
521.17
1429.07

196.02
1502.9
2371.09
1386.19
474.46
615.72
2113.12

Total
###
INR 98,688
7.04%
490.78
2527.08

###

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
-1
-2
-3
-4
-5
0
0
0
0
0
Output
Year
Current
-1
-2
-3
-4
-5
0
0
0
0
0

R& D Expenses
1026.00
! Year -1 is the year prior to the current year
698.00
! Year -2 is the two years prior to the current year
399.00
211.00
89.00

R&D Expense
1594.00
1026.00
698.00
399.00
211.00
89.00
0.00
0.00
0.00
0.00
0.00

Unamortized portion
1.00
1594.00
0.80
820.80
0.60
418.80
0.40
159.60
0.20
42.20
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

Value of Research Asset =


Amortization of asset for current year =

0.00

$3,035.40
$484.60

Amortization this year


$205.20
$139.60
$79.80
$42.20
$17.80
$0.00
$0.00
$0.00
$0.00
$0.00

$484.60

Adjustment to Operating Income =


Tax Effect of R&D Expensing

$1,109.40 ! A positive number indicates an increase in operating income (add to reported EBIT)
$377

Look Up Table for Amortization Periods

Industry Name Amortization Period


Advertising
2
Aerospace/Defense
10
Air Transport
10
Aluminum
5
Apparel
3
Auto & Truck
10
Auto Parts (OEM)
5
Auto Parts (Replacement) 5
Bank
2
Bank (Canadian)
2
Bank (Foreign)
2
Bank (Midwest)
2
Beverage (Alcoholic)
3
Beverage (Soft Drink)
3
Building Materials
5
Cable TV
10
Canadian Energy
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

Non-technological Service
Retail, Tech Service
Light Manufacturing
Heavy Manufacturing
Research, with Patenting
Long Gestation Period

2 years
3 years
5 years
10 years
10 years
10 years

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)
Petroleum (Producing)
Precision Instrument
Publishing
R.E.I.T.
Railroad
Recreation
Restaurant
Retail (Special Lines)
Retail Building Supply
Retail Store
Securities Brokerage
Semiconductor
Semiconductor Cap Equip
Shoe
Steel (General)
Steel (Integrated)
Telecom. Equipment
Telecom. Services
Textile
Thrift
Tire & Rubber
Tobacco
Toiletries/Cosmetics
Trucking/Transp. Leasing
Utility (Foreign)
Water Utility

5
5
5
3
3
5
5
2
2
2
2
2
5
5
3
5
5
10
5
5
2
5
5
3
5
10
10

Operating Lease Converter


Inputs
Operating lease expense in current year =
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

$121.00

Output
Pre-tax Cost of Debt =

12.25%

! 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) =
$17,527.00 ! This is the EBIT reported in the current income statement
Reported Debt =
$109,197.99 ! This is the interest-bearing debt reported on the balance sheet
Number of years embedded in yr 6 estimate =

! 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
$138.98
2
$143.00
$113.49
3
$122.00
$86.26
4
$109.00
$68.66
5
$97.00
$54.43
6 and beyond
$149.33
$200.40 ! Commitment beyond year 6 converted into an annuity for ten years
Debt Value of leases =
$662.22
Restated Financials
Depreciation on Operating Lease Asset =
Adjustment to Operating Earnings =
Adjustment to Total Debt outstanding =

$82.78 ! I use straight line depreciation


$81.12 ! PV of operating leases * Pre-tax cost of debt
$662.22

EBIT (1 -t) =
Expected growth rate in perpetuity =
Cost of capital =
Return on capital =

###
5.00%
10.39%
12.00%

Reinvestment Rate =
Terminal Value =

41.67%
###

Growth RateReinvestment Rate FCFF Terminal value


0%
0.00%
45,278 $435,686.47
1%
8.33%
41,505 $441,901.46
2%
16.67%
37,731 $449,597.58
3%
25.00%
33,958 $459,375.90
4%
33.33%
30,185 $472,213.65
5%
41.67%
26,412 $489,812.96

Two-Stage FCFF Discount Model

Rupees

Input Summary
Dollar

Normalized EBIT (before adjustments)INR 25,464.20

INR 25,464.20

Adjusted EBIT =

INR 25,464.20

INR 25,464.20

Adjusted Interest Expense =

INR 6,737.00

INR 6,737.00

Adjusted Capital Spending

INR 40,291.00

INR 40,291.00

Adjusted Depreciation & Amort'n =

INR 8,701.00

INR 8,701.00

Tax Rate on Income =

21.00%

21.00%

Marginal tax rate =

33.99%

33.99%

Current Revenues =

INR 265,868.00 INR 265,868.00

Current Non-cash Working Capital = -INR 4,085.00

-INR 4,085.00

Chg. Working Capital =

INR 2,732.00

INR 2,732.00

Adjusted Book Value of Debt =

INR 62,805.00

INR 62,805.00

Adjusted Book Value of Equity =

INR 78,395.00

INR 78,395.00

Invested Capital

INR 117,227.00 INR 117,227.00

Length of High Growth Period =

10

Forever

12.01%

5.00%

Debt Ratio used in Cost of Capital Calculation=


25.30%

25.30%

Growth Rate =

Beta used for stock =

1.20

1.00

Lambda used for stock =

0.80

0.80

Riskfree rate =

5.00%

5.00%

Mature Market Equity Premium =

4.50%

4.50%

Country Risk Premium =

4.50%

3.00%

Cost of Debt =

12.25%

9.00%

Tax Rate for computing income=

21.00%

33.99%

Marginal tax rate =

33.99%

33.99%

Return on Capital =

17.16%

12.00%

Reinvestment Rate =

70.00%

41.67%

Page

Two-Stage FCFF Discount Model

Output from the program


Cost of Equity =

14.00%

Equity/(Debt+Equity ) =

74.70%

After-tax Cost of debt =

8.09%

Debt/(Debt +Equity) =

25.30%

Cost of Capital =

12.50%

Intermediate Output
Expected Growth Rate

12.01%

Working Capital as percent of revenues = -1.54%

(in percent)

The FCFF for the high growth phase are shown below (upto 10 years)
Current

10

Expected Growth Rate

12.01%

12.01%

12.01%

12.01%

12.01%

10.61%

9.21%

7.80%

6.40%

5.00%

Cumulated Growth

112.01%

125.47%

140.54%

157.42%

176.33%

195.04%

213.00%

229.62%

244.32%

256.54%

Reinvestment Rate

70.00%

70.00%

70.00%

70.00%

70.00%

64.33%

58.67%

53.00%

47.33%

41.67%

EBIT * (1 - tax rate) INR 20,116.71

INR 22,533.20

INR 25,239.97

INR 28,271.88

INR 31,667.99

INR 35,472.05

###

###

###

###

###

- (CapEx-Depreciation)
INR 31,590.00

INR 16,263.95

INR 18,217.62

INR 20,405.99

INR 22,857.22

INR 25,602.91

###

###

###

###

###

-Chg. Working Capital


INR 2,732.00

-INR 490.70

-INR 549.65

-INR 615.67

-INR 689.63

-INR 772.47

-INR 764.24

-INR 733.59

-INR 679.10

-INR 600.56

-INR 499.03

Free Cashflow to Firm


-INR 14,205.29

INR 6,759.96

INR 7,571.99

INR 8,481.56

INR 9,500.40

INR 10,641.62

###

###

###

###

###

Cost of Capital

12.50%

12.50%

12.50%

12.50%

12.50%

12.08%

11.66%

11.24%

10.81%

10.39%

Cumulated Cost of Capital

1.1250

1.2657

1.4240

1.6020

1.8023

2.0201

2.2556

2.5091

2.7804

3.0693

$6,009

$5,982

$5,956

$5,930

$5,904

$6,927

$7,852

$8,653

$9,310

$9,808

Present Value

Growth Rate in Stable Phase =

5.00%

Reinvestment Rate in Stable Phase =

41.67%

FCFF in Stable Phase =

INR 26,411.96

Cost of Equity in Stable Phase =

11.90%

Equity/ (Equity + Debt) =

74.70%

AT Cost of Debt in Stable Phase =

5.94%

Debt/ (Equity + Debt) =

25.30%

Page

Two-Stage FCFF Discount Model

Cost of Capital in Stable Phase =


Value at the end of growth phase =

10.39%
###

Valuation
Present Value of FCFF in high growth phase =

INR 72,332.15

Present Value of Terminal Value of Firm =

INR 159,581.99

Value of operating assets of the firm =

INR 231,914.14

Value of Cash, Marketable Securities & Non-operating assets =

INR 151,993.98

Value of Firm =

INR 383,908.12

Market Value of outstanding debt =

INR 109,197.99

Minority Interest in consolidated holdings =

INR 0.00

Market Value of Equity =

INR 274,710.13

Value of Equity in Options =

INR 0.00

Value of Equity in Common Stock =

INR 274,710.13

Market Value of Equity/share =

INR 665.07

Market Value of Equity/share in BR =


Year
EBIT (1-t)
- Reinvestment
FCFF

1
22533
15773
6760

INR 665.07
2
25240
17668
7572

3
28272
19790
8482

4
31668
22168
9500

5
35472
24830
10642

Page

6
39236
25242
13994

7
42848
25138
17711

8
46192
24482
21710

9
49150
23264
25886

10
51607
21503
30104

Two-Stage FCFF Discount Model

Page

Two-Stage FCFF Discount Model

Terminal Year

###
###
-INR 635.07
###

Page

Two-Stage FCFF Discount Model

Page

Valuing Options or Warrants


Enter the current stock price =
Enter the strike price on the option =
Enter the expiration of the option =
Enter the standard deviation in stock prices =
Enter the annualized dividend yield on stock =
Enter the treasury bond rate =
Enter the number of warrants (options) outstanding =
Enter the number of shares outstanding =

$780.50
$13.85
1.5
30.00% (volatility)
0.00%
5.00%
2.23
413.05

Do not input any numbers below this line


VALUING WARRANTS WHEN THERE IS DILUTION
Stock Price=
780.5 # Warrants issued=
Strike Price=
13.85 # Shares outstanding=
Adjusted S =
#VALUE! T.Bond rate=
Adjusted K =
13.85 Variance=
Expiration (in years) =
1.5 Annualized dividend yield=
Div. Adj. interest rate=
d1 =
N (d1) =

#VALUE!
#VALUE!

d2 =
N (d2) =

#VALUE!
#VALUE!

Value per option =


#VALUE!
Value of all options outstanding =

#VALUE!

2.23
413
5.00%
0.0900
0.00%
5.00%

Bottom-up Beta Calculator


Unlevered beta for sector =
Output
Firm's Current market value D/E ratio =
Firm's Current tax rate =
Bottom-up beta for firm =

1.04 ! Look up industry averages

33.87% ! Reverted back to conventional debt to equity ratio


33.99%
1.27

1.6363636364

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) =
$17,527.00 (Add back only long term interest expense for f
Enter current interest expenses =
$6,737.00 (Use only long term interest expense for financi
Enter current long term government bond rate =
5.00%
Output
Interest coverage ratio =
2.60
Estimated Bond Rating =
B+
Estimated Default Spread =
4.25%
Estimated Cost of Debt =
9.25%
For large manufacturing firms
If interest coverage ratio is
>
to
Rating is
-100000
0.199999
D
0.2
0.649999
C
0.65
0.799999
CC
0.8
1.249999
CCC
1.25
1.499999
B1.5
1.749999
B
1.75
1.999999
B+
2
2.2499999
BB
2.25
2.49999
BB+
2.5
2.999999
BBB
3
4.249999
A4.25
5.499999
A
5.5
6.499999
A+
6.5
8.499999
AA
8.50
100000
AAA

Spread is
15.00%
12.00%
10.00%
8.50%
5.50%
5.25%
4.25%
4.00%
3.50%
2.00%
1.50%
1.25%
1.00%
0.75%
0.50%

For smaller and riskier firms


If interest coverage ratio is
greater than
to
-100000
0.499999
0.5
0.799999
0.8
1.249999
1.25
1.499999
1.5
1.999999
2
2.499999
2.5
2.999999
3
3.499999
3.5
3.9999999
4
4.499999
4.5
5.999999
6
7.499999
7.5
9.499999
9.5
12.499999
12.5
100000

Spread is
15.00%
12.00%
10.00%
8.50%
5.50%
5.25%
4.25%
4.00%
3.50%
2.00%
1.50%
1.25%
1.00%
0.75%
0.50%

Rating is
D
C
CC
CCC
BB
B+
BB
BB+
BBB
AA
A+
AA
AAA

For financial service firms


If long term interest coverage ratio is
greater than
to
Rating is
-100000
0.049999
D
0.05
0.099999
C
0.1
0.199999
CC
0.2
0.299999
CCC
0.3
0.399999
B0.4
0.499999
B
0.5
0.599999
B+
0.6
0.749999
BB
0.75
0.899999
BB+
0.9
1.199999
BBB
1.2
1.49999
A1.5
1.99999
A
2
2.49999
A+
2.5
2.99999
AA
3
100000
AAA

, 3 if financial service firm)


long term interest expense for financial firms)
erm interest expense for financial firms)

SpreadOperating
is
Income Decline
15.00%
15.00%
12.00%
10.00%
10.00%
8.00%
8.50%
6.00%
5.50%
5.00%
5.25%
4.50%
4.25%
4.00%
4.00%
3.00%
3.50%
2.50%
2.00%
1.50%
1.50%
1.30%
1.25%
1.20%
1.00%
1.15%
0.75%
0.90%
0.50%
0.70%

Industry Name
Number of firmsLevered Beta Unlevered Beta
Std Dev: Equity
Advertising
30
1.43
0.87
80.69%
Aerospace/Defense
66
1.27
1.20
47.75%
Air Transport
44
1.15
0.86
60.46%
Apparel
53
1.14
0.93
68.33%
Auto & Truck
20
1.49
0.76
34.92%
Auto Parts
54
1.56
1.10
52.04%
Bank
477
0.71
0.47
27.49%
Bank (Canadian)
8
0.86
0.83
17.85%
Bank (Midwest)
39
0.91
0.66
27.13%
Beverage
41
0.95
0.85
54.53%
Biotechnology
108
1.25
1.27
69.85%
Building Materials
52
1.39
0.80
61.96%
Cable TV
25
1.56
0.95
44.91%
Canadian Energy
12
1.22
0.99
33.84%
Chemical (Basic)
19
1.26
1.10
37.09%
Chemical (Diversified)
33
1.21
1.10
39.47%
Chemical (Specialty)
88
1.18
0.98
57.61%
Coal
18
1.98
1.43
49.41%
Computer Software/Svcs
322
1.22
1.33
71.38%
Computers/Peripherals
125
1.29
1.39
82.96%
Diversified Co.
113
1.25
0.60
48.51%
Drug
342
1.16
1.14
96.99%
E-Commerce
54
1.50
1.76
57.18%
Educational Services
34
0.84
0.89
52.81%
Electric Util. (Central)
24
0.82
0.49
21.09%
Electric Utility (East)
26
0.74
0.50
22.24%
Electric Utility (West)
16
0.79
0.50
18.64%
Electrical Equipment
83
1.37
1.26
57.31%
Electronics
173
1.31
1.23
79.26%
Entertainment
84
1.66
1.09
50.24%
Entertainment Tech
33
1.45
2.33
70.79%
Environmental
79
1.11
0.80
87.19%
Financial Svcs. (Div.)
296
1.27
0.45
62.78%
Food Processing
109
0.80
0.65
40.11%
Food Wholesalers
18
0.73
0.54
46.75%
Foreign Electronics
10
1.18
1.40
25.56%
Furn/Home Furnishings
34
1.29
0.94
43.85%
Grocery
14
0.84
0.78
27.93%
Healthcare Information
29
1.05
1.04
50.75%
Heavy Construction
14
1.48
1.74
42.91%
Homebuilding
32
1.36
0.65
44.28%
Hotel/Gaming
68
1.70
0.84
64.47%
Household Products
26
1.08
0.95
37.34%
Human Resources
31
1.44
1.61
43.81%
Industrial Services
167
1.20
0.98
63.50%
Information Services
34
1.22
1.24
37.26%
Insurance (Life)
35
1.17
1.27
50.74%
Insurance (Prop/Cas.)
78
0.91
0.92
26.47%
Internet
208
1.41
1.66
86.31%

Market D/E
126.31%
27.21%
78.21%
44.32%
183.75%
94.19%
91.52%
10.36%
68.98%
19.02%
9.98%
103.11%
88.77%
35.70%
29.11%
26.70%
35.74%
48.02%
7.77%
18.36%
160.98%
14.51%
11.43%
2.22%
107.83%
73.30%
90.70%
23.53%
45.62%
79.23%
11.54%
49.86%
261.38%
35.15%
59.50%
42.29%
65.75%
13.91%
19.87%
9.49%
162.15%
142.62%
23.21%
18.42%
43.98%
21.88%
21.71%
1.89%
4.07%

Market Debt/Capital
ROE
55.81% 21.54%
21.39% 25.52%
43.89% 31.77%
30.71% 16.38%
64.76% 85.35%
48.50% 19.79%
47.79% 14.58%
9.39%
23.19%
40.82% 17.19%
15.98% 24.85%
9.08%
22.16%
50.76% 13.03%
47.03%
7.00%
26.31% 20.83%
22.55% 25.33%
21.07% 26.45%
26.33% 18.88%
32.44% 13.96%
7.21%
47.49%
15.51% 49.14%
61.68% 29.12%
12.67% 26.23%
10.26% 10.10%
2.18%
48.89%
51.88% 11.46%
42.30% 13.38%
47.56% 10.89%
19.05% 24.82%
31.33% 10.63%
44.21%
8.08%
10.35%
-5.09%
33.27% 14.34%
72.33% 14.91%
26.01% 20.98%
37.30% 15.36%
29.72% 12.30%
39.67% 12.64%
12.21% 17.58%
16.58% 43.47%
8.67%
21.05%
61.85% -63.59%
58.78% 17.10%
18.84% 21.67%
15.55% 16.30%
30.55% 19.74%
17.95% 32.04%
17.84% 20.91%
1.85%
20.44%
3.91%
25.60%

Investment Co.
Investment Co.(Foreign)
Machinery
Manuf. Housing/RV
Maritime
Medical Services
Medical Supplies
Metal Fabricating
Metals & Mining (Div.)
Natural Gas (Div.)
Natural Gas Utility
Newspaper
Office Equip/Supplies
Oil/Gas Distribution
Oilfield Svcs/Equip.
Packaging & Container
Paper/Forest Products
Petroleum (Integrated)
Petroleum (Producing)
Pharmacy Services
Power
Precious Metals
Precision Instrument
Property Management
Publishing
R.E.I.T.
Railroad
Recreation
Reinsurance
Restaurant
Retail (Special Lines)
Retail Automotive
Retail Building Supply
Retail Store
Securities Brokerage
Semiconductor
Semiconductor Equip
Shoe
Steel (General)
Steel (Integrated)
Telecom. Equipment
Telecom. Services
Thrift
Tobacco
Toiletries/Cosmetics
Trucking
Utility (Foreign)
Water Utility
Wireless Networking
Public/Private Equity

17
16
124
18
56
160
252
35
78
34
25
16
26
19
112
33
38
25
188
19
66
75
90
17
27
144
15
64
11
68
155
16
8
38
32
122
16
19
20
14
110
140
234
12
23
33
5
16
57
10

0.83
1.31
1.39
1.32
1.30
1.10
1.17
1.56
1.69
1.20
0.69
1.16
1.11
0.89
1.56
1.27
1.20
1.34
1.24
0.94
1.63
1.41
1.47
1.38
1.24
1.35
1.25
1.41
0.91
1.26
1.26
1.31
1.01
1.01
1.37
1.81
1.78
1.23
1.71
1.96
1.49
1.43
0.66
0.71
0.95
1.17
1.23
0.86
1.54
2.08

0.90
1.36
1.08
1.38
0.52
0.90
1.13
1.55
1.48
0.85
0.43
0.72
0.84
0.53
1.27
0.81
0.64
1.30
0.97
0.81
0.95
1.37
1.59
0.46
0.62
0.92
0.99
1.01
1.00
1.09
1.22
0.93
0.86
0.86
0.37
2.11
2.20
1.39
1.53
1.54
1.87
1.06
0.69
0.69
0.79
0.66
0.85
0.57
1.28
0.48

18.96%
28.87%
48.66%
47.67%
37.08%
86.84%
72.38%
60.00%
97.21%
35.65%
25.71%
34.32%
42.36%
36.90%
46.34%
39.90%
48.42%
37.35%
78.27%
30.96%
71.09%
67.33%
53.96%
32.79%
39.28%
36.52%
30.42%
57.75%
22.33%
48.95%
57.15%
35.23%
24.82%
40.30%
51.25%
59.20%
43.35%
39.32%
44.25%
49.03%
75.07%
82.14%
31.62%
29.69%
51.70%
38.85%
28.01%
35.87%
58.41%
45.59%

14.84%
5.16%
55.77%
50.13%
185.73%
54.66%
13.28%
25.44%
21.94%
58.57%
85.33%
86.43%
60.35%
81.95%
42.35%
84.83%
118.10%
14.67%
37.57%
23.50%
107.88%
11.77%
22.65%
282.91%
137.13%
53.19%
41.53%
62.58%
11.37%
24.97%
26.07%
66.88%
26.35%
30.29%
462.27%
13.32%
13.62%
3.66%
32.18%
64.96%
12.71%
51.32%
9.71%
8.84%
38.50%
126.80%
62.82%
82.79%
36.37%
391.15%

12.92%
4.90%
35.80%
33.39%
65.00%
35.34%
11.72%
20.28%
17.99%
36.94%
46.04%
46.36%
37.64%
45.04%
29.75%
45.90%
54.15%
12.79%
27.31%
19.03%
51.90%
10.53%
18.47%
73.88%
57.83%
34.72%
29.34%
38.49%
10.21%
19.98%
20.68%
40.08%
20.85%
23.25%
82.22%
11.75%
11.98%
3.53%
24.34%
39.38%
11.28%
33.91%
8.85%
8.12%
27.80%
55.91%
38.58%
45.29%
26.67%
79.64%

647.73%
10.46%
23.51%
8.90%
19.95%
24.56%
23.17%
22.01%
30.86%
14.31%
12.36%
13.96%
19.85%
15.81%
25.10%
15.41%
5.75%
26.14%
16.75%
11.99%
19.05%
3.32%
15.26%
9.58%
-66.38%
8.95%
15.12%
14.49%
17.04%
29.70%
23.03%
16.17%
21.07%
19.89%
-11.10%
22.18%
32.37%
28.40%
27.03%
20.96%
35.37%
16.18%
6.69%
70.43%
98.41%
12.03%
3.89%
0.63%
7.85%
17.72%

Funeral Services
Market

6
6870

1.41
1.19

1.02
0.93

29.93%
56.57%

67.25%
48.81%

40.21%
32.80%

15.04%
20.64%

ROC
13.01%
19.53%
22.00%
18.05%
18.80%
21.81%
NA
NA
NA
18.98%
14.78%
11.35%
10.91%
25.35%
21.96%
23.67%
17.93%
20.13%
36.64%
32.96%
10.79%
22.57%
12.54%
46.84%
10.28%
11.64%
11.52%
20.50%
13.01%
9.98%
4.51%
13.67%
12.33%
15.64%
14.62%
16.90%
13.85%
17.38%
24.69%
18.45%
-23.17%
10.83%
17.10%
17.34%
18.18%
21.20%
NA
NA
26.46%

Effective Tax Rate


18.90%
24.10%
23.00%
17.21%
24.36%
19.61%
25.91%
15.08%
26.81%
16.46%
3.59%
18.44%
22.97%
27.82%
19.29%
25.47%
18.99%
10.52%
12.65%
9.90%
20.23%
5.96%
13.09%
20.80%
33.02%
32.09%
30.47%
14.23%
11.87%
17.17%
13.67%
15.45%
17.93%
21.67%
27.39%
37.04%
23.99%
32.96%
16.47%
34.26%
6.13%
17.97%
29.87%
29.77%
19.26%
20.44%
25.86%
20.26%
7.50%

Pre-tax Operating
After-tax
Margin
Operating Margin
Net Margin
17.93%
11.95%
2.26%
12.31%
8.31%
3.57%
13.57%
11.05%
0.17%
12.98%
10.18%
2.69%
13.10%
7.96%
0.57%
7.65%
5.56%
0.90%
NA
NA
NA
NA
NA
NA
NA
NA
NA
20.00%
14.75%
5.77%
26.91%
16.90%
8.33%
14.04%
10.51%
2.23%
34.41%
19.49%
3.28%
40.66%
28.84%
9.48%
15.05%
11.97%
6.40%
19.87%
14.14%
5.55%
14.08%
9.75%
2.69%
18.05%
15.76%
4.53%
24.51%
17.24%
8.24%
11.61%
8.78%
3.55%
22.39%
17.93%
4.85%
30.15%
22.65%
8.38%
12.69%
8.76%
3.38%
17.36%
11.69%
5.63%
21.86%
14.67%
3.61%
25.85%
17.24%
4.49%
24.38%
16.51%
3.72%
15.75%
11.48%
4.96%
7.57%
5.61%
1.40%
23.75%
15.00%
3.66%
3.93%
1.77%
-1.45%
21.85%
13.42%
3.48%
85.68%
76.59%
-22.60%
11.98%
8.59%
2.98%
5.66%
3.75%
0.94%
13.50%
7.43%
1.67%
10.51%
7.04%
1.43%
5.87%
3.81%
1.06%
20.66%
14.16%
7.79%
5.98%
3.85%
2.23%
-16.16%
-16.36%
-10.34%
22.98%
15.26%
3.26%
21.24%
15.33%
5.90%
5.69%
3.31%
1.20%
11.76%
8.27%
2.03%
21.26%
14.72%
5.92%
NA
NA
NA
NA
NA
NA
19.23%
13.94%
6.53%

NA
NA
17.21%
9.47%
12.18%
18.25%
20.34%
21.33%
27.62%
15.08%
12.02%
11.21%
15.81%
11.69%
20.50%
17.06%
11.21%
25.61%
23.41%
12.17%
11.71%
8.54%
16.76%
9.81%
20.12%
8.49%
13.91%
14.02%
NA
22.15%
22.65%
11.67%
17.82%
15.19%
15.35%
28.67%
29.91%
28.46%
21.54%
19.41%
26.58%
22.22%
NA
32.64%
23.11%
12.67%
9.93%
8.11%
10.21%
6.46%

0.00%
2.11%
22.71%
14.98%
7.08%
18.36%
12.51%
20.43%
9.29%
24.19%
24.52%
23.53%
22.76%
9.48%
22.07%
24.65%
13.66%
33.79%
13.98%
21.13%
6.25%
5.94%
14.38%
19.27%
20.73%
1.21%
30.62%
19.12%
8.87%
20.10%
23.08%
34.23%
28.12%
25.68%
22.16%
10.48%
22.03%
30.35%
29.15%
29.90%
12.08%
15.90%
17.04%
20.25%
23.28%
33.19%
15.01%
35.46%
14.08%
6.70%

NA
NA
13.72%
3.83%
30.66%
12.69%
11.53%
14.65%
36.00%
34.06%
14.77%
21.90%
9.94%
15.24%
26.36%
13.39%
12.24%
17.96%
38.57%
6.41%
18.09%
32.80%
16.31%
35.51%
17.26%
18.11%
31.92%
19.56%
NA
16.35%
9.37%
6.72%
11.59%
6.93%
33.95%
27.73%
23.75%
12.52%
12.53%
18.78%
13.97%
39.80%
NA
9.68%
12.03%
13.28%
15.29%
40.45%
18.28%
53.29%

NA
NA
9.49%
2.37%
29.09%
8.16%
8.54%
10.22%
25.33%
23.75%
10.36%
16.06%
6.92%
12.24%
19.65%
10.04%
10.31%
10.45%
26.43%
4.13%
12.74%
23.79%
12.59%
27.99%
10.27%
16.08%
20.60%
15.62%
NA
13.16%
6.06%
4.31%
7.31%
4.47%
25.61%
21.97%
17.41%
8.44%
8.29%
14.41%
10.62%
28.38%
NA
6.66%
7.97%
8.54%
9.47%
25.93%
11.63%
47.57%

NA
NA
3.49%
-1.61%
13.32%
2.38%
3.60%
2.71%
5.94%
9.41%
2.30%
2.18%
1.74%
4.25%
8.24%
1.97%
0.80%
5.11%
6.99%
1.43%
2.50%
9.32%
4.11%
4.02%
1.30%
61.19%
7.24%
4.49%
NA
4.10%
1.82%
1.26%
2.26%
1.56%
-1.40%
4.69%
4.57%
1.68%
4.36%
5.67%
2.81%
3.45%
NA
3.00%
3.04%
0.95%
0.01%
3.63%
3.52%
22.90%

11.67%
17.73%

33.26%
16.67%

20.82%
20.77%

13.16%
14.61%

2.96%
3.44%

Cap Ex/ Depreciation


Non-cash WC/
Payout
Revenues
RatioReinvestment Rate
Sales/Capital 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%
84.21%
134.95%
81.33%
523.30%
146.47%
98.75%
195.35%
251.65%
281.53%
146.56%
71.55%
83.36%
373.42%
268.73%
95.74%
90.62%
186.98%
291.48%
163.33%
197.18%
230.19%
51.15%
608.41%
89.69%
607.00%
190.87%
201.19%
NA
178.56%
139.68%
233.04%
242.53%
202.23%
166.76%
110.68%
95.15%
135.60%
187.15%
124.02%
71.60%
190.13%
NA
331.23%
117.56%
682.72%
143.73%
262.28%
82.96%
15.66%

NA
NA
16.14%
5.71%
7.18%
-6.66%
6.59%
10.84%
5.81%
-3.94%
5.17%
3.05%
9.33%
-0.45%
12.70%
5.96%
11.37%
2.22%
2.89%
5.33%
6.96%
0.02%
10.13%
-17.86%
4.17%
-4.12%
-4.11%
-0.80%
NA
-5.11%
6.30%
12.86%
5.07%
1.53%
120.39%
8.97%
15.62%
16.15%
14.33%
15.49%
0.25%
-10.85%
NA
0.78%
8.54%
5.27%
4.62%
1.68%
6.91%
33.11%

NA
36.72%
10.21%
9.05%
17.67%
0.86%
15.25%
10.49%
10.00%
13.80%
30.14%
9.12%
10.66%
39.70%
6.06%
12.39%
28.92%
14.04%
5.13%
6.20%
0.19%
19.95%
4.96%
23.90%
80.61%
115.46%
14.10%
21.67%
12.85%
21.18%
9.70%
1.96%
14.55%
11.18%
28.02%
21.82%
5.01%
11.89%
9.43%
6.35%
13.06%
21.11%
64.16%
32.09%
16.72%
8.06%
0.00%
274.15%
1.53%
23.46%

NA
-1.55%
-1.51%
9.17%
69.70%
5.72%
-3.33%
8.66%
10.91%
50.53%
8.35%
-4.55%
-5.75%
47.94%
18.86%
-3.29%
0.62%
12.52%
42.65%
2.63%
12.47%
51.75%
-14.88%
94.40%
-1.09%
242.89%
18.83%
20.73%
0.00%
14.97%
9.60%
24.14%
23.42%
22.28%
140.87%
1.50%
5.06%
1.42%
-13.36%
-8.04%
-7.29%
-1.41%
422.33%
24.30%
0.78%
170.96%
0.00%
18.42%
-32.77%
0.73%

NA
NA
1.81
3.99
0.42
2.24
2.38
2.09
1.09
0.63
1.16
0.70
2.28
0.95
1.04
1.70
1.09
2.45
0.89
2.95
0.92
0.36
1.33
0.35
1.96
0.53
0.68
0.90
NA
1.68
3.74
2.70
2.44
3.40
0.60
1.30
1.72
3.37
2.60
1.35
2.50
0.78
NA
4.90
2.90
1.48
1.05
0.31
0.88
0.14

NA
NA
0.70
0.17
2.23
0.59
1.08
0.59
1.49
2.00
1.09
1.12
0.52
1.36
1.24
0.72
0.74
0.65
1.29
0.56
1.54
4.72
0.92
2.90
0.89
4.05
2.03
1.16
NA
1.57
0.40
0.47
0.72
0.54
1.82
1.31
0.81
0.84
0.55
0.59
0.90
1.69
NA
1.47
0.98
0.75
0.90
3.80
2.36
4.01

116.53%
158.90%

0.96%
9.07%

17.83%
16.22%

1.70%
-30.90%

0.89
1.21

1.40
1.28