Intrinsic Value Calculator Instructions

Wealthy Education
INVESTING TOOL
INTRINSIC VALUE CALCULATOR
MANUAL INSTRUCTION
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DISCLAIMER
LEGALLY REQUIRED DISCLAIMER - THIS INTRINSIC VALUE CALCULATOR IS PROVIDED ONLY AS A GENERAL SELF-HELP
INVESTMENT PLANNING TOOL AND IT IS USED ONLY FOR INFORMATIONAL AND EDUCATIONAL PURPOSES. THE
CALCULATION OF THE INTRINSIC VALUE RELIES HEAVILY ON ASSUMPTIONS OF INVESTORS, HENCE THERE IS NO
GUARANTEE OR WARRANTY CONCERNING THE RELIABILITY, ACCURACY AND COMPLETENESS OF THE PROVIDED
INFORMATION. AS AN INVESTOR, YOU HAVE TO UNDERSTAND THE RISKS INVOLVED IN FINANCIAL PLANNING AND
FORECAST. WE ARE NEITHER STOCK BROKERS NOR REGISTERED INVESTMENT ADVISORS. WE DO NOT RECOMMEND
MAKING ANY INVESTMENT DECISIONS ON BUYING OR SELLING ANY FINANCIAL SECURITIES AND INVESTMENTS.
INDIVIDUALS SHOULD FIND REGISTERED INVESTMENT ADVISORS TO HELP THEM MAKE INVESTMENT DECISIONS.
INDIVIDUALS SHOULD BE CAUTIOUS ABOUT MAKING THEIR OWN INVESTMENT DECISIONS. INDIVIDUALS ARE SOLY
RESPONSIBLE FOR THEIR INVESTMENT DECISIONS. WE ARE NOT RESPONSIBLE FOR ANY LIABILITIES AND LOSSES,
WHICH MAY ARISE FROM THE USE AND APPLICATION OF THE INTRINSIC VALUE CALCULATOR.
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HOW TO FIND NEEDED FINANCIAL FIGURES

• There are 14 figures that you’ll need to find:
1. Current Share Price 8. Stock Beta
2. Market Cap 9. TTM Free Cash Flow
3. Number of Shares Outstanding 10. Long-term & GDP Growth Rate
4. Short-term Debt 11. Market Risk Premium
5. Long-term Debt 12. Risk Free Rate
6. Total Liabilities 13. Interest Rate
7. Cash & Cash Equivalents 14. Income Tax Rate
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1 – Current Share Price
i.e. The stock is currently selling at $29.41
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4 – Current Share Price (cont.)

Current Share Price
Go to Yahoo Finance & Search Using The Stock’s Ticker Symbol Page 22
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2 – Market Cap
 Market Value of Equity is known as Market Capitalization
 Using Financial Data from Yahoo Finance
 Under “Statistics”
 Find the Market Cap figure
 TXRH currently has a Market Cap of $4.56 Billion
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10 – Market Value of Equity (cont.)
Market Cap
$4.56 Billion
or $4,560 Million
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3 – Total Number of Shares Outstanding

• Using Financial Data from Yahoo Finance
 TXRH currently has 71.41 million shares outstanding
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2 – Total Number of Shares Outstanding (cont.)
71.41 Million Shares Outstanding
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4+5 – Short-term & Long-term Debts

 Using Financial Data from Financials.Morningstar.com
 Under “Financials” / Balance Sheet
 Use Quarterly data
 Looking at the most recent quarter figures
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11 – Market Value of Debt (cont.)
Click GO
Enter the stock’s ticker symbol here
Wealthy Education Most Recent Quarter
11 – Market Value of Debt (cont.)
 Total LT Debts = 52 + 96 = $148M
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6 – Total Liabilities
 Find the company’s Balance Sheet
 Using Quarterly Financial Data
 Using the Total Liabilities figure reported in the most recent quarter
 This figure will be used to calculate Intrinsic Value per share
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7 – Total Cash & Cash Equivalents

 Find the company’s Balance Sheet
 Using Quarterly Financial Data
 Using the Cash & Cash Equivalents reported in the most recent quarter
 This figure will be used to calculate Intrinsic Value per share
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Most Recent Quarter

12 – Total Liabilities (cont.)
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8 – Stock Beta
 Under “Statistics”
 Find the Beta figure on the right column
 TXRH currently has a stock beta of 0.22
 If the beta is too low (below 0.60), we’ll use a beta of 1.0
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5 – Stock Beta (cont.)
Stock Beta = 0.22

If the beta is below 0.60,
we’ll use a beta of 1.0
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9 – Free Cash Flow (FCF)

• We’ll use a TTM Free Cash Flow figure
• Trailing Twelve Months (TTM) is the timeframe of the past twelve months
• The TTM Free Cash Flow is simply the Free Cash Flow that the business
generated in the past 12 months
 A reason for using the TTM Free Cash Flow figure is because it’s more timely
than the previous year’s Free Cash Flow figure
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9 – Free Cash Flow (cont.)

 Find the Cash Flow Statement
 Use the TTM Free Cash Flow Figure
 You should avoid investing in businesses that have a negative
Free Cash Flow
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Trailing Twelve Months (TTM)
1 – Free Cash Flow (cont.)
TTM Free Cash Flow = $138M
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10 – Long-term Growth Rate

 Consider the Estimated Growth Rate (next 5 years)
 To be conservative, compare the company’s projected growth
rate with its industry figure
 Use the LOWEST Growth Rate
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3 – Long-term Growth Rate (cont.)
LT Growth Rate = 20.03%

To be more conservative
 15% 
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11 – GDP Growth Rate

 Using Financial Data from Databank.WorldBank.org
 Under “Data” / Economy & Growth / GDP Growth
 Using your country’s GDP Growth Rate
 Using the most recent data
This figure will be used to calculate the Terminal Value of the business
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14 – GDP Growth Rate (cont.)
Go to Databank.Worldbank.Com & Select GDP Growth Indicator
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Select 5 Years
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Calculate an Average Number

(1.7 + 2.6 + 2.9 + 1.5) / 4
 Perpetuity Growth Rate = 2.175%
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12 – Market Risk Premium

• The Market Risk Premium is the rate of return over the Risk Free Rate
required by the investors
• Similar to the Risk Free Rate, the Market Risk Premium varies among
different countries
• Estimated figure – It’s challenging to find the exact number!
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12 – Market Risk Premium (cont.)

130 Swaziland 11.71%
131 Sweden 5.21%
132 Switzerland 5.21%
133 Taiwan 5.92%
134 Tajikistan 12.90%
135 Thailand 7.10%
136
137
Trinidad and Tobago
Tunisia
8.16%
10.53%
Market Risk Premium Data
138 Turkey 8.16%
139 Turks and Caicos Islands 7.10% Download FREE at
140 Uganda 11.71%
140 Ukraine 15.85%
141 United Arab Emirates 5.79% WealthyEducation.com
142 United Kingdom 5.79%
143 United States 5.21%
144 Uruguay 7.46%
145 Venezuela 17.02%
146 Vietnam 10.53%
147 Zambia 12.90%
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13 – Risk Free Rate

• The Risk Free Rate is the minimum rate of return that investors expect to
earn from an investment without any risks
• We’ll use a return of the 10-Year Government’s Bond as a Risk Free Rate
• The Risk Free Rate varies among different countries, and you can easily find
your country’s Long-term Government’s Bond Rate of Return on the Internet.
 Visit: http://www.investing.com/rates-bonds/
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6 – Risk Free Rate (cont.)

Select Your Country!
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13 – Estimated Long-term Interest Rate

• You can find the Interest Rate on the company’s Annual Report
• Go to the company’s website and find the previous year’s Annual Report
• Skim the Annual Report and search for the Interest Rate
• Using the highest Long-term Interest Rate (be conservative) if you don’t
know how to calculate the Weighted Average Interest Rate
• For example, Interest Rate is 3.00%
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14 – Business Tax Rate

• You can easily find the Business Tax Rate from Financials.Morningstar.com
or on the company’s annual reports (financial statements)
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8 – Business Tax Rate (cont.)
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ADD ALL FIGURES TO THE CALCULATOR
Insert all figures into the Calculator

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IMPORTANT NOTICES
• Financial Data are entirely collected from the Investment Research sites. In some cases, the
information may be sufficient but not provided in real time.
• The Intrinsic Value is estimated by using the Discounted Cash Flow Model.
• The Market Value of Debt is estimated by using the Book Value of Debt. This may lead to a
different result of the Intrinsic Value.
• The Market Risk Premium is just an estimated number.
• To be conservative, you may use the highest Tax Rate and Interest Rate, and reduce the
Estimated Long-term Growth Rate by 1-3% when calculating the Intrinsic Value.
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THANK YOU!
• Thank you so much for using our Intrinsic Value Calculator!
• If you have any concerns or questions, feel free to email us: support@wealthyeducation.com
we are always willing to help you!
• For more information:
 Visit our website: www.wealthyeducation.com
 Check out our Investing Training Courses: www.wealthyeducation.com/courses
• Good luck on your investment career!
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LET’S KEEP IN TOUCH!
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• Fully Develop a Successful Entrepreneurial Mindset (Most Important)
• What does really mean ‘doing business’?
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Intrinsic Value Calculator Instructions

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HOW TO FIND NEEDED FINANCIAL FIGURES

1 – Current Share Price

i.e. The stock is currently selling at $29.41

4 – Current Share Price (cont.)

 Using Financial Data from Yahoo Finance

 Find the Market Cap figure

 TXRH currently has a Market Cap of $4.56 Billion

10 – Market Value of Equity (cont.)

3 – Total Number of Shares Outstanding

 TXRH currently has 71.41 million shares outstanding

2 – Total Number of Shares Outstanding (cont.)

71.41 Million Shares Outstanding

4+5 – Short-term & Long-term Debts

 Under “Financials” / Balance Sheet

 Use Quarterly data

 Looking at the most recent quarter figures

11 – Market Value of Debt (cont.)

11 – Market Value of Debt (cont.)

 Total LT Debts = 52 + 96 = $148M

 Find the company’s Balance Sheet

 Using Quarterly Financial Data

 This figure will be used to calculate Intrinsic Value per share

7 – Total Cash & Cash Equivalents

 Find the company’s Balance Sheet

 Using Quarterly Financial Data

 This figure will be used to calculate Intrinsic Value per share

Most Recent Quarter

 Find the Beta figure on the right column

 TXRH currently has a stock beta of 0.22

5 – Stock Beta (cont.)

Stock Beta = 0.22

9 – Free Cash Flow (FCF)

generated in the past 12 months

than the previous year’s Free Cash Flow figure

9 – Free Cash Flow (cont.)

 Find the Cash Flow Statement

 Use the TTM Free Cash Flow Figure

 You should avoid investing in businesses that have a negative

Free Cash Flow

Trailing Twelve Months (TTM)

1 – Free Cash Flow (cont.)

TTM Free Cash Flow = $138M

10 – Long-term Growth Rate

 Consider the Estimated Growth Rate (next 5 years)

 To be conservative, compare the company’s projected growth

rate with its industry figure

 Use the LOWEST Growth Rate

3 – Long-term Growth Rate (cont.)

LT Growth Rate = 20.03%

11 – GDP Growth Rate

 Under “Data” / Economy & Growth / GDP Growth

 Using your country’s GDP Growth Rate

 Using the most recent data

14 – GDP Growth Rate (cont.)

Go to Databank.Worldbank.Com & Select GDP Growth Indicator

14 – GDP Growth Rate (cont.)

14 – GDP Growth Rate (cont.)

14 – GDP Growth Rate (cont.)

Calculate an Average Number

12 – Market Risk Premium

required by the investors

• Estimated figure – It’s challenging to find the exact number!

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