How We Calculate Our Values
All of our company values are based on the most recent quarterly filed financial statements with the Security and Exchange Commission. The Net Current Asset Value, Book Value and Growth Rate are precise calculations based on the most up to date financial information that is available, as well as historically filed financial statements. The Intrinsic Value, however, is more of an approximation of the value of the company’s worth because it is based on the past and projected earnings of the company. As we all know, earnings can not only fluctuate year to year, but also quarter to quarter. Since some financial statements are not filed in U.S. Dollars, all of our value calculations are currency converted to U.S. Dollars based on the most recent currency rates.
Net Current Asset Value - NCAV
The Net Current Asset Value is derived from the most recent quarterly Balance Sheet. We take the Total Current Assets ( Cash, Total Receivables, Total Inventory, Prepaid Expenses and Other Current Assets), subtract the Total Liabilities (Accounts Payable, Payable/Accrued, Accrued Expenses, Notes Payable/Short Term Debt, Capital Leases, Other Current Liabilities, Total Long Term Debt, Deffered Income Tax, Minority Interest and Total Other Liabilities) and divide by the Total Shares Outstanding (Total Common Shares Outstanding and Total Preferred Shares Outstanding) to get a value per share.
NCAV = (Total Current Assets – Total Liabilities)
Total Shares Outstanding
Book Value - BV
The Book Value is derived from the most recent quarter’s Balance Sheet and is different than the standard Book Value used in the financial industry. We take the Total Assets (Total Current Assets, Property/Plant Equipment, Goodwill, Intangibles, Long Term Investments, Long Term Notes Receivable, Other Long Term Assets and Total Other Assets), subtract Goodwill and Intangibles (this is the difference between our Book Value and the standard Book Value used) and divide by Total Shares Outstanding (Total Common Shares Outstanding and Total Preferred Shares Outstanding) to get a value per share.
BV = (Total Assets – Goodwill – Intangibles)
Total Shares Outstanding
Intrinsic Value – IV
The Intrinsic Value is derived from the Annual Cash Flow Statements over the last five years and the most recent quarterly Balance Sheet. From the Annual Cash Flow Statements over the last five years, we add together the averages of the Cash From Operating Activities and Capital Expenditures. Next, we divide the resulting figure by an interest rate (usually the rate of the 10 year treasury) to make the figure an annuity for the company that we are valuing. Lastly, we then divide by the Total Shares Outstanding, taken from the most recent quarter’s Balance Sheet, to get a value per share. As you can see, there is some judgment needed in determining the rate to divide by in calculating this value . Because of this, we feel that this calculation is an approximate valuation of the true earnings potential of the company.
IV = ((Avg. Cash From Operating Activities + Avg. Capital Expenditures)
(an Interest Rate, usually the yield on a 10 year treasury))
Total Shares Outstanding
***Note: The average is derived from the Annual Cash Flow Statements over the last 5 years***
Growth Rate - GR
The growth rate is derived from the looking at the Balance Sheet for the most recent quarterly statement and statement filed five years prior. We take the Book Value (as explained above) of the company for the most recent quarter and divide it by the Book Value five years ago. Then, to account for the time span between the Balance Sheet statements, we take the figure to the exponent of one over the time (1 / X in years, 4.75 would be 4 and ¾ years). Lastly, we subtract by one and multiply the figure by 100 to get a percentage for the Growth Rate. The resulting percentage is the average annual growth rate for the Book Value of the company which is typically over the last five years.
Growth Rate = ((Current Book Value / Old Book Value)^(1/Years))-1)*100%