Intrinsic value of Rogers Communications Inc. Class B Non-v - RCI-B

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$62.69

  Intrinsic Value

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  Value-price divergence*

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$62.69

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

We calculate the intrinsic value of RCI-B 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 2016), $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 32.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   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
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.15
  2.90
  3.11
  3.30
  3.47
  3.62
  3.76
  3.88
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
Revenue, $m
  13,702
  14,099
  14,538
  15,017
  15,538
  16,101
  16,707
  17,356
  18,049
  18,788
  19,575
  20,410
  21,296
  22,235
  23,228
  24,278
  25,387
  26,557
  27,792
  29,094
  30,466
  31,912
  33,434
  35,036
  36,723
  38,498
  40,364
  42,328
  44,393
  46,563
  48,846
Variable operating expenses, $m
 
  11,395
  11,737
  12,112
  12,518
  12,958
  13,430
  13,937
  14,478
  15,055
  15,669
  15,930
  16,622
  17,354
  18,129
  18,949
  19,814
  20,728
  21,692
  22,708
  23,779
  24,907
  26,095
  27,346
  28,662
  30,047
  31,504
  33,037
  34,648
  36,343
  38,124
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
  11,807
  11,395
  11,737
  12,112
  12,518
  12,958
  13,430
  13,937
  14,478
  15,055
  15,669
  15,930
  16,622
  17,354
  18,129
  18,949
  19,814
  20,728
  21,692
  22,708
  23,779
  24,907
  26,095
  27,346
  28,662
  30,047
  31,504
  33,037
  34,648
  36,343
  38,124
Operating income, $m
  1,895
  2,704
  2,801
  2,906
  3,020
  3,144
  3,277
  3,419
  3,571
  3,734
  3,906
  4,480
  4,675
  4,881
  5,098
  5,329
  5,572
  5,829
  6,100
  6,386
  6,687
  7,005
  7,339
  7,690
  8,061
  8,450
  8,860
  9,291
  9,744
  10,221
  10,722
EBITDA, $m
  4,242
  5,072
  5,229
  5,402
  5,589
  5,792
  6,010
  6,243
  6,492
  6,758
  7,041
  7,342
  7,661
  7,998
  8,355
  8,733
  9,132
  9,553
  9,997
  10,465
  10,959
  11,479
  12,027
  12,603
  13,210
  13,848
  14,520
  15,226
  15,969
  16,749
  17,570
Interest expense (income), $m
  756
  746
  776
  809
  844
  883
  925
  969
  1,018
  1,069
  1,124
  1,182
  1,244
  1,310
  1,379
  1,453
  1,531
  1,613
  1,700
  1,791
  1,888
  1,990
  2,097
  2,210
  2,329
  2,454
  2,585
  2,724
  2,869
  3,022
  3,183
Earnings before tax, $m
  1,159
  1,958
  2,024
  2,097
  2,176
  2,261
  2,352
  2,450
  2,554
  2,664
  2,782
  3,298
  3,430
  3,571
  3,719
  3,876
  4,041
  4,216
  4,400
  4,595
  4,799
  5,015
  5,242
  5,481
  5,732
  5,996
  6,275
  6,567
  6,875
  7,198
  7,538
Tax expense, $m
  324
  529
  547
  566
  588
  610
  635
  661
  689
  719
  751
  890
  926
  964
  1,004
  1,046
  1,091
  1,138
  1,188
  1,241
  1,296
  1,354
  1,415
  1,480
  1,548
  1,619
  1,694
  1,773
  1,856
  1,944
  2,035
Net income, $m
  835
  1,430
  1,478
  1,531
  1,588
  1,650
  1,717
  1,788
  1,864
  1,945
  2,031
  2,407
  2,504
  2,607
  2,715
  2,829
  2,950
  3,078
  3,212
  3,354
  3,503
  3,661
  3,826
  4,001
  4,184
  4,377
  4,580
  4,794
  5,019
  5,255
  5,503

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
  0
Total assets, $m
  28,342
  29,191
  30,099
  31,092
  32,171
  33,336
  34,589
  35,933
  37,369
  38,899
  40,528
  42,257
  44,092
  46,035
  48,091
  50,264
  52,560
  54,984
  57,540
  60,236
  63,077
  66,070
  69,221
  72,539
  76,031
  79,705
  83,570
  87,635
  91,910
  96,405
  101,130
Adjusted assets (=assets-cash), $m
  28,342
  29,191
  30,099
  31,092
  32,171
  33,336
  34,589
  35,933
  37,369
  38,899
  40,528
  42,257
  44,092
  46,035
  48,091
  50,264
  52,560
  54,984
  57,540
  60,236
  63,077
  66,070
  69,221
  72,539
  76,031
  79,705
  83,570
  87,635
  91,910
  96,405
  101,130
Revenue / Adjusted assets
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
Average production assets, $m
  18,060
  18,583
  19,161
  19,793
  20,480
  21,221
  22,019
  22,875
  23,789
  24,763
  25,800
  26,901
  28,068
  29,305
  30,614
  31,998
  33,459
  35,002
  36,630
  38,346
  40,154
  42,059
  44,066
  46,178
  48,401
  50,740
  53,200
  55,788
  58,509
  61,371
  64,378
Working capital, $m
  -2,543
  -945
  -974
  -1,006
  -1,041
  -1,079
  -1,119
  -1,163
  -1,209
  -1,259
  -1,312
  -1,367
  -1,427
  -1,490
  -1,556
  -1,627
  -1,701
  -1,779
  -1,862
  -1,949
  -2,041
  -2,138
  -2,240
  -2,347
  -2,460
  -2,579
  -2,704
  -2,836
  -2,974
  -3,120
  -3,273
Total debt, $m
  16,951
  17,640
  18,379
  19,187
  20,065
  21,013
  22,034
  23,127
  24,296
  25,542
  26,867
  28,275
  29,769
  31,350
  33,024
  34,793
  36,662
  38,635
  40,716
  42,910
  45,222
  47,659
  50,224
  52,925
  55,767
  58,758
  61,904
  65,213
  68,693
  72,351
  76,197
Total liabilities, $m
  23,073
  23,762
  24,501
  25,309
  26,187
  27,135
  28,156
  29,249
  30,418
  31,664
  32,989
  34,397
  35,891
  37,472
  39,146
  40,915
  42,784
  44,757
  46,838
  49,032
  51,344
  53,781
  56,346
  59,047
  61,889
  64,880
  68,026
  71,335
  74,815
  78,473
  82,319
Total equity, $m
  5,269
  5,430
  5,598
  5,783
  5,984
  6,200
  6,434
  6,683
  6,951
  7,235
  7,538
  7,860
  8,201
  8,562
  8,945
  9,349
  9,776
  10,227
  10,702
  11,204
  11,732
  12,289
  12,875
  13,492
  14,142
  14,825
  15,544
  16,300
  17,095
  17,931
  18,810
Total liabilities and equity, $m
  28,342
  29,192
  30,099
  31,092
  32,171
  33,335
  34,590
  35,932
  37,369
  38,899
  40,527
  42,257
  44,092
  46,034
  48,091
  50,264
  52,560
  54,984
  57,540
  60,236
  63,076
  66,070
  69,221
  72,539
  76,031
  79,705
  83,570
  87,635
  91,910
  96,404
  101,129
Debt-to-equity ratio
  3.217
  3.250
  3.280
  3.320
  3.350
  3.390
  3.420
  3.460
  3.500
  3.530
  3.560
  3.600
  3.630
  3.660
  3.690
  3.720
  3.750
  3.780
  3.800
  3.830
  3.850
  3.880
  3.900
  3.920
  3.940
  3.960
  3.980
  4.000
  4.020
  4.030
  4.050
Adjusted equity ratio
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  835
  1,430
  1,478
  1,531
  1,588
  1,650
  1,717
  1,788
  1,864
  1,945
  2,031
  2,407
  2,504
  2,607
  2,715
  2,829
  2,950
  3,078
  3,212
  3,354
  3,503
  3,661
  3,826
  4,001
  4,184
  4,377
  4,580
  4,794
  5,019
  5,255
  5,503
Depreciation, amort., depletion, $m
  2,347
  2,367
  2,429
  2,496
  2,569
  2,648
  2,733
  2,824
  2,921
  3,025
  3,135
  2,862
  2,986
  3,118
  3,257
  3,404
  3,560
  3,724
  3,897
  4,079
  4,272
  4,474
  4,688
  4,913
  5,149
  5,398
  5,660
  5,935
  6,224
  6,529
  6,849
Funds from operations, $m
  2,920
  3,797
  3,907
  4,027
  4,158
  4,299
  4,450
  4,612
  4,785
  4,970
  5,166
  5,269
  5,490
  5,724
  5,972
  6,233
  6,510
  6,801
  7,109
  7,433
  7,775
  8,135
  8,514
  8,913
  9,333
  9,775
  10,240
  10,729
  11,243
  11,783
  12,352
Change in working capital, $m
  -1,037
  -27
  -29
  -32
  -35
  -38
  -41
  -43
  -46
  -50
  -53
  -56
  -59
  -63
  -67
  -70
  -74
  -78
  -83
  -87
  -92
  -97
  -102
  -107
  -113
  -119
  -125
  -132
  -138
  -145
  -153
Cash from operations, $m
  3,957
  3,643
  3,936
  4,059
  4,193
  4,336
  4,491
  4,656
  4,832
  5,019
  5,219
  5,325
  5,550
  5,787
  6,038
  6,304
  6,584
  6,880
  7,192
  7,521
  7,867
  8,232
  8,616
  9,021
  9,446
  9,894
  10,365
  10,861
  11,381
  11,929
  12,505
Maintenance CAPEX, $m
  0
  -1,921
  -1,977
  -2,038
  -2,106
  -2,179
  -2,258
  -2,342
  -2,433
  -2,531
  -2,634
  -2,745
  -2,862
  -2,986
  -3,118
  -3,257
  -3,404
  -3,560
  -3,724
  -3,897
  -4,079
  -4,272
  -4,474
  -4,688
  -4,913
  -5,149
  -5,398
  -5,660
  -5,935
  -6,224
  -6,529
New CAPEX, $m
  -2,398
  -523
  -578
  -632
  -687
  -742
  -798
  -855
  -914
  -974
  -1,037
  -1,101
  -1,168
  -1,237
  -1,309
  -1,384
  -1,462
  -1,543
  -1,628
  -1,716
  -1,809
  -1,905
  -2,006
  -2,112
  -2,223
  -2,339
  -2,460
  -2,588
  -2,721
  -2,861
  -3,008
Cash from investing activities, $m
  -2,456
  -2,444
  -2,555
  -2,670
  -2,793
  -2,921
  -3,056
  -3,197
  -3,347
  -3,505
  -3,671
  -3,846
  -4,030
  -4,223
  -4,427
  -4,641
  -4,866
  -5,103
  -5,352
  -5,613
  -5,888
  -6,177
  -6,480
  -6,800
  -7,136
  -7,488
  -7,858
  -8,248
  -8,656
  -9,085
  -9,537
Free cash flow, $m
  1,501
  1,199
  1,381
  1,389
  1,400
  1,416
  1,435
  1,458
  1,484
  1,514
  1,548
  1,479
  1,520
  1,564
  1,612
  1,663
  1,718
  1,778
  1,841
  1,908
  1,979
  2,055
  2,136
  2,221
  2,311
  2,406
  2,507
  2,613
  2,725
  2,843
  2,968
Issuance/(repayment) of debt, $m
  -538
  689
  739
  808
  878
  949
  1,020
  1,094
  1,169
  1,246
  1,326
  1,408
  1,493
  1,582
  1,674
  1,769
  1,869
  1,973
  2,081
  2,194
  2,313
  2,436
  2,565
  2,701
  2,842
  2,991
  3,146
  3,309
  3,480
  3,659
  3,846
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $m  
  -595
  689
  739
  808
  878
  949
  1,020
  1,094
  1,169
  1,246
  1,326
  1,408
  1,493
  1,582
  1,674
  1,769
  1,869
  1,973
  2,081
  2,194
  2,313
  2,436
  2,565
  2,701
  2,842
  2,991
  3,146
  3,309
  3,480
  3,659
  3,846
Total cash flow (excl. dividends), $m
  906
  1,887
  2,120
  2,197
  2,278
  2,364
  2,455
  2,551
  2,653
  2,760
  2,873
  2,887
  3,013
  3,146
  3,285
  3,433
  3,587
  3,750
  3,922
  4,102
  4,292
  4,491
  4,701
  4,922
  5,153
  5,397
  5,653
  5,922
  6,205
  6,502
  6,814
Retained Cash Flow (-), $m
  367
  -161
  -169
  -185
  -201
  -217
  -233
  -250
  -267
  -285
  -303
  -322
  -341
  -361
  -382
  -404
  -427
  -451
  -476
  -501
  -528
  -557
  -586
  -617
  -650
  -683
  -719
  -756
  -795
  -836
  -879
Prev. year cash balance distribution, $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 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
 
  1,727
  1,951
  2,012
  2,078
  2,148
  2,222
  2,302
  2,386
  2,476
  2,571
  2,566
  2,672
  2,784
  2,903
  3,028
  3,160
  3,300
  3,446
  3,601
  3,763
  3,935
  4,115
  4,304
  4,504
  4,714
  4,934
  5,166
  5,410
  5,666
  5,935
Discount rate, %
 
  9.50
  9.98
  10.47
  11.00
  11.55
  12.12
  12.73
  13.37
  14.04
  14.74
  15.47
  16.25
  17.06
  17.91
  18.81
  19.75
  20.74
  21.77
  22.86
  24.01
  25.21
  26.47
  27.79
  29.18
  30.64
  32.17
  33.78
  35.47
  37.24
  39.10
PV of cash for distribution, $m
 
  1,577
  1,613
  1,492
  1,369
  1,243
  1,118
  995
  875
  759
  650
  527
  439
  359
  289
  228
  177
  134
  99
  72
  51
  35
  23
  15
  10
  6
  3
  2
  1
  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

Rogers Communications Inc. operates as a communications and media company in Canada. The company’s Wireless segment offers wireless telecommunications services to consumers and businesses under the Rogers, Fido, chatr, and Mobilicity brands; and wireless devices, services, and applications. This segment distributes its products through independent dealer networks, company-owned retail stores, retail chains and convenience stores, ecommerce sites, call centers and outbound telemarketing, and other distribution channels. As of December 31, 2015, it had approximately 9.9 million subscribers. The company’s Cable segment provides high-speed broadband Internet access, digital television and online viewing, phone, and home Wi-Fi services to consumers and businesses. This segment distributes its products through company-owned retail stores, ecommerce sites, call centers, outbound telemarketing, door-to-door agents, and third party retail locations. It had 2.0 million high-speed Internet subscribers, 1.9 million television subscribers, and 1.1 million phone subscribers, as well as operated a network that passes approximately 4.2 million homes. The company’s Business Solutions segment offers network connectivity services through its fiber network and data center assets for businesses, governments, and other telecommunications providers. This segment provides its products through its sales team; and a network of third-party channel distributors. Its Media segment offers consumer magazine, marketing, medical, financial, trade, and online publications, as well as digital magazine services; operates television networks and radio stations, and online and mobile digital media platforms; and owns the Toronto Blue Jays, a major league baseball team and Rogers Centre event venue. The company also provides digital services, and home security and automation systems; and credit cards. Rogers Communications Inc. was founded in 1920 and is headquartered in Toronto, Canada.

FINANCIAL RATIOS  of  Rogers Communications Inc. Class B Non-v (RCI-B)

Valuation Ratios
P/E Ratio 38.7
Price to Sales 2.4
Price to Book 6.1
Price to Tangible Book
Price to Cash Flow 8.2
Price to Free Cash Flow 20.7
Growth Rates
Sales Growth Rate 2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.2%
Cap. Spend. - 3 Yr. Gr. Rate 0.8%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 290.9%
Total Debt to Equity 321.7%
Interest Coverage 3
Management Effectiveness
Return On Assets 4.8%
Ret/ On Assets - 3 Yr. Avg. 6.4%
Return On Total Capital 3.7%
Ret/ On T. Cap. - 3 Yr. Avg. 5.5%
Return On Equity 15.3%
Return On Equity - 3 Yr. Avg. 22%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 51.8%
Gross Margin - 3 Yr. Avg. 52.5%
EBITDA Margin 31.1%
EBITDA Margin - 3 Yr. Avg. 35.2%
Operating Margin 13.8%
Oper. Margin - 3 Yr. Avg. 17.9%
Pre-Tax Margin 8.5%
Pre-Tax Margin - 3 Yr. Avg. 12.1%
Net Profit Margin 6.1%
Net Profit Margin - 3 Yr. Avg. 8.8%
Effective Tax Rate 28%
Eff/ Tax Rate - 3 Yr. Avg. 27.2%
Payout Ratio 118.3%

RCI-B stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RCI-B stock intrinsic value calculation we used $13702 million for the last fiscal year's total revenue generated by Rogers Communications Inc. Class B Non-v. The default revenue input number comes from 2016 income statement of Rogers Communications Inc. Class B Non-v. 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 RCI-B stock valuation model: a) initial revenue growth rate of 2.9% 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 9.5%, whose default value for RCI-B is calculated based on our internal credit rating of Rogers Communications Inc. Class B Non-v, 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 Rogers Communications Inc. Class B Non-v.
    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 RCI-B stock the variable cost ratio is equal to 80.9%.

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 RCI-B 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 4.4% for Rogers Communications Inc. Class B Non-v.

Corporate tax rate of 27% is the nominal tax rate for Rogers Communications Inc. Class B Non-v. 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 RCI-B 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 RCI-B are equal to 131.8%.

Life of production assets of 9.4 years is the average useful life of capital assets used in Rogers Communications Inc. Class B Non-v 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 RCI-B is equal to -6.7%. 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 - $5269 million for Rogers Communications Inc. Class B Non-v - 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 516.386 million for Rogers Communications Inc. Class B Non-v 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 Rogers Communications Inc. Class B Non-v at the current share price and the inputted number of shares is $32.4 billion.


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