Intrinsic value of Brookfield Asset Management Inc. Class A - BAM-A

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$48.87

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$48.87

 
Intrinsic value

$81.32

 
Up/down potential

+66%

 
Rating

str. buy

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BAM-A stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2015), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 48.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2015(a)
   2016
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.44
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
Revenue, $m
  26,904
  29,164
  31,515
  33,958
  36,498
  39,137
  41,879
  44,730
  47,694
  50,777
  53,984
  57,324
  60,801
  64,425
  68,203
  72,144
  76,256
  80,550
  85,034
  89,719
  94,618
  99,739
  105,098
  110,704
  116,573
  122,718
  129,153
  135,895
  142,958
  150,360
  158,119
Variable operating expenses, $m
 
  18,753
  20,236
  21,779
  23,382
  25,048
  26,779
  28,579
  30,449
  32,395
  34,420
  36,184
  38,380
  40,667
  43,052
  45,539
  48,135
  50,845
  53,676
  56,633
  59,725
  62,958
  66,341
  69,880
  73,584
  77,463
  81,525
  85,781
  90,239
  94,912
  99,809
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  20,331
  18,753
  20,236
  21,779
  23,382
  25,048
  26,779
  28,579
  30,449
  32,395
  34,420
  36,184
  38,380
  40,667
  43,052
  45,539
  48,135
  50,845
  53,676
  56,633
  59,725
  62,958
  66,341
  69,880
  73,584
  77,463
  81,525
  85,781
  90,239
  94,912
  99,809
Operating income, $m
  6,573
  10,411
  11,278
  12,179
  13,116
  14,089
  15,100
  16,152
  17,245
  18,381
  19,564
  21,139
  22,422
  23,758
  25,151
  26,605
  28,121
  29,704
  31,358
  33,086
  34,892
  36,781
  38,757
  40,825
  42,989
  45,255
  47,628
  50,114
  52,719
  55,449
  58,310
EBITDA, $m
  8,863
  13,120
  14,178
  15,277
  16,420
  17,607
  18,841
  20,123
  21,457
  22,844
  24,287
  25,789
  27,354
  28,984
  30,684
  32,456
  34,306
  36,238
  38,255
  40,363
  42,567
  44,871
  47,282
  49,804
  52,444
  55,209
  58,104
  61,137
  64,314
  67,645
  71,135
Interest expense (income), $m
  3,960
  4,158
  4,795
  5,480
  6,193
  6,934
  7,704
  8,504
  9,335
  10,200
  11,099
  12,034
  13,008
  14,023
  15,080
  16,182
  17,331
  18,531
  19,783
  21,091
  22,457
  23,886
  25,380
  26,943
  28,578
  30,290
  32,082
  33,959
  35,926
  37,986
  40,145
Earnings before tax, $m
  6,573
  6,253
  6,483
  6,699
  6,923
  7,155
  7,397
  7,648
  7,910
  8,182
  8,466
  9,105
  9,414
  9,736
  10,072
  10,423
  10,790
  11,174
  11,575
  11,995
  12,435
  12,895
  13,377
  13,882
  14,411
  14,965
  15,546
  16,155
  16,793
  17,463
  18,165
Tax expense, $m
  265
  1,688
  1,750
  1,809
  1,869
  1,932
  1,997
  2,065
  2,136
  2,209
  2,286
  2,458
  2,542
  2,629
  2,719
  2,814
  2,913
  3,017
  3,125
  3,239
  3,357
  3,482
  3,612
  3,748
  3,891
  4,040
  4,197
  4,362
  4,534
  4,715
  4,904
Net income, $m
  3,163
  4,565
  4,733
  4,890
  5,054
  5,223
  5,400
  5,583
  5,774
  5,973
  6,180
  6,647
  6,872
  7,107
  7,352
  7,609
  7,877
  8,157
  8,450
  8,756
  9,077
  9,413
  9,765
  10,134
  10,520
  10,924
  11,348
  11,793
  12,259
  12,748
  13,260

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,748
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  188,495
  199,753
  215,853
  232,590
  249,985
  268,061
  286,845
  306,371
  326,671
  347,786
  369,757
  392,628
  416,448
  441,270
  467,147
  494,138
  522,304
  551,710
  582,423
  614,517
  648,065
  683,147
  719,846
  758,249
  798,446
  840,534
  884,612
  930,786
  979,165
  1,029,866
  1,083,008
Adjusted assets (=assets-cash), $m
  184,747
  199,753
  215,853
  232,590
  249,985
  268,061
  286,845
  306,371
  326,671
  347,786
  369,757
  392,628
  416,448
  441,270
  467,147
  494,138
  522,304
  551,710
  582,423
  614,517
  648,065
  683,147
  719,846
  758,249
  798,446
  840,534
  884,612
  930,786
  979,165
  1,029,866
  1,083,008
Revenue / Adjusted assets
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
  0.146
Average production assets, $m
  54,981
  59,611
  64,416
  69,411
  74,601
  79,996
  85,602
  91,428
  97,487
  103,788
  110,344
  117,170
  124,278
  131,686
  139,408
  147,463
  155,868
  164,643
  173,809
  183,387
  193,398
  203,868
  214,819
  226,280
  238,275
  250,835
  263,989
  277,769
  292,206
  307,337
  323,196
Working capital, $m
  0
  -4,054
  -4,381
  -4,720
  -5,073
  -5,440
  -5,821
  -6,217
  -6,629
  -7,058
  -7,504
  -7,968
  -8,451
  -8,955
  -9,480
  -10,028
  -10,600
  -11,196
  -11,820
  -12,471
  -13,152
  -13,864
  -14,609
  -15,388
  -16,204
  -17,058
  -17,952
  -18,889
  -19,871
  -20,900
  -21,979
Total debt, $m
  81,524
  94,015
  107,458
  121,434
  135,958
  151,052
  166,737
  183,040
  199,992
  217,622
  235,968
  255,065
  274,955
  295,681
  317,289
  339,826
  363,345
  387,899
  413,545
  440,343
  468,355
  497,649
  528,292
  560,359
  593,923
  629,067
  665,872
  704,427
  744,824
  787,159
  831,533
Total liabilities, $m
  154,303
  166,794
  180,237
  194,213
  208,737
  223,831
  239,516
  255,819
  272,771
  290,401
  308,747
  327,844
  347,734
  368,460
  390,068
  412,605
  436,124
  460,678
  486,324
  513,122
  541,134
  570,428
  601,071
  633,138
  666,702
  701,846
  738,651
  777,206
  817,603
  859,938
  904,312
Total equity, $m
  34,192
  32,959
  35,616
  38,377
  41,247
  44,230
  47,329
  50,551
  53,901
  57,385
  61,010
  64,784
  68,714
  72,810
  77,079
  81,533
  86,180
  91,032
  96,100
  101,395
  106,931
  112,719
  118,775
  125,111
  131,744
  138,688
  145,961
  153,580
  161,562
  169,928
  178,696
Total liabilities and equity, $m
  188,495
  199,753
  215,853
  232,590
  249,984
  268,061
  286,845
  306,370
  326,672
  347,786
  369,757
  392,628
  416,448
  441,270
  467,147
  494,138
  522,304
  551,710
  582,424
  614,517
  648,065
  683,147
  719,846
  758,249
  798,446
  840,534
  884,612
  930,786
  979,165
  1,029,866
  1,083,008
Debt-to-equity ratio
  2.384
  2.850
  3.020
  3.160
  3.300
  3.420
  3.520
  3.620
  3.710
  3.790
  3.870
  3.940
  4.000
  4.060
  4.120
  4.170
  4.220
  4.260
  4.300
  4.340
  4.380
  4.410
  4.450
  4.480
  4.510
  4.540
  4.560
  4.590
  4.610
  4.630
  4.650
Adjusted equity ratio
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,163
  4,565
  4,733
  4,890
  5,054
  5,223
  5,400
  5,583
  5,774
  5,973
  6,180
  6,647
  6,872
  7,107
  7,352
  7,609
  7,877
  8,157
  8,450
  8,756
  9,077
  9,413
  9,765
  10,134
  10,520
  10,924
  11,348
  11,793
  12,259
  12,748
  13,260
Depreciation, amort., depletion, $m
  2,290
  2,709
  2,900
  3,098
  3,304
  3,518
  3,740
  3,972
  4,212
  4,462
  4,722
  4,650
  4,932
  5,226
  5,532
  5,852
  6,185
  6,533
  6,897
  7,277
  7,675
  8,090
  8,525
  8,979
  9,455
  9,954
  10,476
  11,023
  11,595
  12,196
  12,825
Funds from operations, $m
  3,613
  7,274
  7,633
  7,988
  8,357
  8,741
  9,140
  9,555
  9,986
  10,435
  10,902
  11,296
  11,804
  12,333
  12,884
  13,460
  14,062
  14,690
  15,347
  16,034
  16,752
  17,503
  18,290
  19,113
  19,975
  20,878
  21,824
  22,815
  23,854
  24,944
  26,085
Change in working capital, $m
  -154
  -314
  -327
  -340
  -353
  -367
  -381
  -396
  -412
  -429
  -446
  -464
  -483
  -504
  -525
  -548
  -572
  -597
  -623
  -651
  -681
  -712
  -745
  -779
  -816
  -854
  -895
  -937
  -982
  -1,029
  -1,078
Cash from operations, $m
  3,767
  9,952
  7,959
  8,328
  8,710
  9,108
  9,521
  9,951
  10,398
  10,863
  11,348
  11,760
  12,287
  12,836
  13,410
  14,008
  14,634
  15,287
  15,970
  16,685
  17,433
  18,215
  19,034
  19,892
  20,791
  21,732
  22,719
  23,752
  24,836
  25,973
  27,164
Maintenance CAPEX, $m
  0
  -2,182
  -2,366
  -2,556
  -2,754
  -2,960
  -3,174
  -3,397
  -3,628
  -3,869
  -4,119
  -4,379
  -4,650
  -4,932
  -5,226
  -5,532
  -5,852
  -6,185
  -6,533
  -6,897
  -7,277
  -7,675
  -8,090
  -8,525
  -8,979
  -9,455
  -9,954
  -10,476
  -11,023
  -11,595
  -12,196
New CAPEX, $m
  -5,448
  -4,631
  -4,805
  -4,995
  -5,191
  -5,394
  -5,606
  -5,827
  -6,058
  -6,301
  -6,557
  -6,825
  -7,109
  -7,407
  -7,722
  -8,055
  -8,405
  -8,775
  -9,166
  -9,577
  -10,012
  -10,469
  -10,952
  -11,460
  -11,996
  -12,560
  -13,154
  -13,779
  -14,438
  -15,130
  -15,859
Cash from investing activities, $m
  -14,948
  -6,813
  -7,171
  -7,551
  -7,945
  -8,354
  -8,780
  -9,224
  -9,686
  -10,170
  -10,676
  -11,204
  -11,759
  -12,339
  -12,948
  -13,587
  -14,257
  -14,960
  -15,699
  -16,474
  -17,289
  -18,144
  -19,042
  -19,985
  -20,975
  -22,015
  -23,108
  -24,255
  -25,461
  -26,725
  -28,055
Free cash flow, $m
  -11,181
  3,139
  789
  777
  765
  753
  741
  727
  712
  694
  673
  556
  529
  497
  462
  421
  376
  326
  271
  210
  144
  71
  -7
  -93
  -184
  -283
  -389
  -503
  -624
  -753
  -891
Issuance/(repayment) of debt, $m
  9,170
  12,491
  13,444
  13,976
  14,524
  15,093
  15,685
  16,304
  16,951
  17,631
  18,345
  19,098
  19,890
  20,726
  21,607
  22,537
  23,519
  24,554
  25,646
  26,798
  28,013
  29,294
  30,644
  32,066
  33,565
  35,143
  36,805
  38,555
  40,397
  42,335
  44,374
Issuance/(repurchase) of shares, $m
  1,551
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  11,898
  12,491
  13,444
  13,976
  14,524
  15,093
  15,685
  16,304
  16,951
  17,631
  18,345
  19,098
  19,890
  20,726
  21,607
  22,537
  23,519
  24,554
  25,646
  26,798
  28,013
  29,294
  30,644
  32,066
  33,565
  35,143
  36,805
  38,555
  40,397
  42,335
  44,374
Total cash flow (excl. dividends), $m
  267
  15,630
  14,233
  14,752
  15,290
  15,847
  16,426
  17,031
  17,663
  18,325
  19,018
  19,654
  20,419
  21,223
  22,069
  22,959
  23,895
  24,880
  25,917
  27,008
  28,157
  29,365
  30,636
  31,974
  33,380
  34,860
  36,416
  38,053
  39,773
  41,582
  43,483
Retained Cash Flow (-), $m
  -2,169
  -2,515
  -2,657
  -2,762
  -2,870
  -2,982
  -3,099
  -3,222
  -3,350
  -3,484
  -3,625
  -3,774
  -3,930
  -4,096
  -4,270
  -4,453
  -4,647
  -4,852
  -5,068
  -5,295
  -5,535
  -5,789
  -6,055
  -6,336
  -6,633
  -6,944
  -7,273
  -7,619
  -7,983
  -8,366
  -8,769
Prev. year cash balance distribution, $m
 
  3,748
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  16,863
  11,576
  11,991
  12,419
  12,864
  13,327
  13,809
  14,313
  14,841
  15,393
  15,880
  16,489
  17,128
  17,799
  18,505
  19,248
  20,028
  20,849
  21,713
  22,621
  23,576
  24,581
  25,637
  26,748
  27,916
  29,143
  30,434
  31,790
  33,216
  34,715
Discount rate, %
 
  11.10
  11.66
  12.24
  12.85
  13.49
  14.17
  14.88
  15.62
  16.40
  17.22
  18.08
  18.98
  19.93
  20.93
  21.98
  23.08
  24.23
  25.44
  26.71
  28.05
  29.45
  30.92
  32.47
  34.09
  35.80
  37.59
  39.47
  41.44
  43.51
  45.69
PV of cash for distribution, $m
 
  15,178
  9,286
  8,481
  7,658
  6,832
  6,019
  5,231
  4,482
  3,783
  3,143
  2,552
  2,048
  1,612
  1,244
  940
  694
  501
  352
  242
  161
  104
  65
  40
  23
  13
  7
  4
  2
  1
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Brookfield Asset Management Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm invests in the property, power, and infrastructure sectors. Its property business includes owning and managing office properties, developing master planned residential communities, and offering clients bridge and mezzanine lending, alternative assets funds, and financial and advisory services. Through its subsidiaries, the firm operates hydroelectric power facilities, interconnections and transmission facilities in Northeast North America, and development of wind power in Canada. Through its subsidiaries, it invests in specialty funds including private equity and makes direct investments in real estate, energy, and resource assets. The firm launches and manages equity and fixed income mutual funds. It also manages real estate and hedge funds. The firm invests in equity and fixed income markets across the globe. It was formerly known as Brascan Corp. Brookfield Asset Management is based in Toronto, Canada with additional offices in Bogota, Colombia, Botafogo, Brazil, Calgary, Canada, Dubai, United Arab Emirates, Gatineau, Canada, Hong Kong, Hong Kong, London, United Kingdom, Melbourne, Australia, Montreal, Canada, Mumbai, India, New York City, Perth, Australia, Shanghai, China, and Sydney, Australia.

FINANCIAL RATIOS  of  Brookfield Asset Management Inc. Class A (BAM-A)

Valuation Ratios
P/E Ratio 14.9
Price to Sales 1.7
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 12.5
Price to Free Cash Flow -27.9
Growth Rates
Sales Growth Rate 8.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 30.3%
Cap. Spend. - 3 Yr. Gr. Rate -6.6%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 238.4%
Total Debt to Equity 238.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.8%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital 2.9%
Ret/ On T. Cap. - 3 Yr. Avg. 3.4%
Return On Equity 9.6%
Return On Equity - 3 Yr. Avg. 11.2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 49.8%
Gross Margin - 3 Yr. Avg. 49%
EBITDA Margin 47.7%
EBITDA Margin - 3 Yr. Avg. 49.9%
Operating Margin 24.4%
Oper. Margin - 3 Yr. Avg. 27.8%
Pre-Tax Margin 24.4%
Pre-Tax Margin - 3 Yr. Avg. 27.8%
Net Profit Margin 11.8%
Net Profit Margin - 3 Yr. Avg. 13.1%
Effective Tax Rate 4%
Eff/ Tax Rate - 3 Yr. Avg. 14.1%
Payout Ratio 24.9%

BAM-A stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BAM-A stock intrinsic value calculation we used $26904 million for the last fiscal year's total revenue generated by Brookfield Asset Management Inc. Class A. The default revenue input number comes from 2015 income statement of Brookfield Asset Management Inc. Class A. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BAM-A stock valuation model: a) initial revenue growth rate of 8.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 11.1%, whose default value for BAM-A is calculated based on our internal credit rating of Brookfield Asset Management Inc. Class A, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Brookfield Asset Management Inc. Class A.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BAM-A stock the variable cost ratio is equal to 64.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BAM-A stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.1% for Brookfield Asset Management Inc. Class A.

Corporate tax rate of 27% is the nominal tax rate for Brookfield Asset Management Inc. Class A. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BAM-A stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BAM-A are equal to 204.4%.

Life of production assets of 25.2 years is the average useful life of capital assets used in Brookfield Asset Management Inc. Class A operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BAM-A is equal to -13.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $34192 million for Brookfield Asset Management Inc. Class A - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 992.396 million for Brookfield Asset Management Inc. Class A is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Brookfield Asset Management Inc. Class A at the current share price and the inputted number of shares is $48.5 billion.


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