Intrinsic value of Citigroup - C

Previous Close

$69.22

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$69.22

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

Our model is not good at valuating stocks of financial companies, such as C.

We calculate the intrinsic value of C 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -100.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
  4.87
Revenue, $m
  0
  73,092
  74,971
  77,080
  79,417
  81,981
  84,773
  87,795
  91,051
  94,545
  98,283
  102,272
  106,519
  111,033
  115,823
  120,898
  126,271
  131,953
  137,956
  144,295
  150,984
  158,037
  165,472
  173,306
  181,556
  190,243
  199,387
  209,008
  219,130
  229,777
  240,974
Variable operating expenses, $m
 
  13,308
  13,492
  13,699
  13,929
  14,180
  14,454
  14,751
  15,070
  15,413
  15,780
  10,038
  10,454
  10,897
  11,367
  11,866
  12,393
  12,951
  13,540
  14,162
  14,818
  15,511
  16,240
  17,009
  17,819
  18,672
  19,569
  20,513
  21,507
  22,552
  23,651
Fixed operating expenses, $m
 
  37,088
  37,904
  38,738
  39,590
  40,461
  41,352
  42,261
  43,191
  44,141
  45,112
  46,105
  47,119
  48,156
  49,215
  50,298
  51,405
  52,535
  53,691
  54,872
  56,080
  57,313
  58,574
  59,863
  61,180
  62,526
  63,901
  65,307
  66,744
  68,212
  69,713
Total operating expenses, $m
  0
  50,396
  51,396
  52,437
  53,519
  54,641
  55,806
  57,012
  58,261
  59,554
  60,892
  56,143
  57,573
  59,053
  60,582
  62,164
  63,798
  65,486
  67,231
  69,034
  70,898
  72,824
  74,814
  76,872
  78,999
  81,198
  83,470
  85,820
  88,251
  90,764
  93,364
Operating income, $m
  0
  22,696
  23,574
  24,642
  25,897
  27,339
  28,967
  30,783
  32,789
  34,990
  37,391
  46,130
  48,946
  51,980
  55,240
  58,735
  62,474
  66,467
  70,725
  75,261
  80,086
  85,213
  90,658
  96,434
  102,558
  109,046
  115,916
  123,188
  130,880
  139,013
  147,610
EBITDA, $m
  3,720
  220,800
  226,612
  233,219
  240,611
  248,787
  257,747
  267,501
  278,059
  289,438
  301,656
  314,737
  328,708
  343,597
  359,436
  376,262
  394,112
  413,028
  433,054
  454,238
  476,629
  500,282
  525,254
  551,604
  579,397
  608,700
  639,585
  672,126
  706,404
  742,500
  780,504
Interest expense (income), $m
  12,067
  82,386
  76,688
  77,921
  79,306
  80,841
  82,525
  84,359
  86,344
  88,482
  90,777
  93,232
  95,852
  98,641
  101,605
  104,751
  108,085
  111,613
  115,345
  119,288
  123,451
  127,843
  132,476
  137,359
  142,504
  147,922
  153,627
  159,632
  165,951
  172,599
  179,592
Earnings before tax, $m
  21,477
  -59,690
  -53,113
  -53,279
  -53,409
  -53,502
  -53,558
  -53,576
  -53,554
  -53,492
  -53,386
  -47,102
  -46,906
  -46,661
  -46,366
  -46,016
  -45,611
  -45,146
  -44,619
  -44,027
  -43,365
  -42,630
  -41,818
  -40,925
  -39,946
  -38,876
  -37,711
  -36,445
  -35,072
  -33,586
  -31,981
Tax expense, $m
  6,444
  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
Net income, $m
  14,912
  -59,690
  -53,113
  -53,279
  -53,409
  -53,502
  -53,558
  -53,576
  -53,554
  -53,492
  -53,386
  -47,102
  -46,906
  -46,661
  -46,366
  -46,016
  -45,611
  -45,146
  -44,619
  -44,027
  -43,365
  -42,630
  -41,818
  -40,925
  -39,946
  -38,876
  -37,711
  -36,445
  -35,072
  -33,586
  -31,981

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
  1,792,077
  987,734
  1,013,119
  1,041,618
  1,073,197
  1,107,845
  1,145,575
  1,186,416
  1,230,415
  1,277,635
  1,328,153
  1,382,057
  1,439,449
  1,500,445
  1,565,170
  1,633,761
  1,706,366
  1,783,148
  1,864,276
  1,949,934
  2,040,319
  2,135,638
  2,236,110
  2,341,970
  2,453,464
  2,570,854
  2,694,413
  2,824,433
  2,961,221
  3,105,097
  3,256,403
Adjusted assets (=assets-cash), $m
  1,792,077
  987,734
  1,013,119
  1,041,618
  1,073,197
  1,107,845
  1,145,575
  1,186,416
  1,230,415
  1,277,635
  1,328,153
  1,382,057
  1,439,449
  1,500,445
  1,565,170
  1,633,761
  1,706,366
  1,783,148
  1,864,276
  1,949,934
  2,040,319
  2,135,638
  2,236,110
  2,341,970
  2,453,464
  2,570,854
  2,694,413
  2,824,433
  2,961,221
  3,105,097
  3,256,403
Revenue / Adjusted assets
  0.000
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
  0.074
Average production assets, $m
  6,090
  1,919,697
  1,969,033
  2,024,422
  2,085,796
  2,153,137
  2,226,466
  2,305,842
  2,391,356
  2,483,130
  2,581,312
  2,686,077
  2,797,622
  2,916,169
  3,041,964
  3,175,273
  3,316,385
  3,465,612
  3,623,287
  3,789,768
  3,965,434
  4,150,689
  4,345,961
  4,551,703
  4,768,396
  4,996,546
  5,236,689
  5,489,388
  5,755,239
  6,034,868
  6,328,937
Working capital, $m
  0
  -1,650,498
  -1,692,916
  -1,740,537
  -1,793,305
  -1,851,203
  -1,914,249
  -1,982,494
  -2,056,016
  -2,134,921
  -2,219,335
  -2,309,408
  -2,405,311
  -2,507,235
  -2,615,389
  -2,730,004
  -2,851,328
  -2,979,629
  -3,115,194
  -3,258,329
  -3,409,361
  -3,568,638
  -3,736,527
  -3,913,418
  -4,099,724
  -4,295,881
  -4,502,348
  -4,719,611
  -4,948,182
  -5,188,599
  -5,441,430
Total debt, $m
  345,100
  1,420,142
  1,442,988
  1,468,637
  1,497,058
  1,528,242
  1,562,198
  1,598,955
  1,638,555
  1,681,053
  1,726,518
  1,775,032
  1,826,685
  1,881,582
  1,939,834
  2,001,566
  2,066,911
  2,136,014
  2,209,029
  2,286,122
  2,367,468
  2,453,255
  2,543,680
  2,638,954
  2,739,299
  2,844,949
  2,956,153
  3,073,171
  3,196,279
  3,325,769
  3,461,944
Total liabilities, $m
  1,566,957
  888,961
  911,807
  937,456
  965,877
  997,061
  1,031,017
  1,067,774
  1,107,374
  1,149,872
  1,195,337
  1,243,851
  1,295,504
  1,350,401
  1,408,653
  1,470,385
  1,535,730
  1,604,833
  1,677,848
  1,754,941
  1,836,287
  1,922,074
  2,012,499
  2,107,773
  2,208,118
  2,313,768
  2,424,972
  2,541,990
  2,665,098
  2,794,588
  2,930,763
Total equity, $m
  225,120
  98,773
  101,312
  104,162
  107,320
  110,785
  114,557
  118,642
  123,042
  127,764
  132,815
  138,206
  143,945
  150,045
  156,517
  163,376
  170,637
  178,315
  186,428
  194,993
  204,032
  213,564
  223,611
  234,197
  245,346
  257,085
  269,441
  282,443
  296,122
  310,510
  325,640
Total liabilities and equity, $m
  1,792,077
  987,734
  1,013,119
  1,041,618
  1,073,197
  1,107,846
  1,145,574
  1,186,416
  1,230,416
  1,277,636
  1,328,152
  1,382,057
  1,439,449
  1,500,446
  1,565,170
  1,633,761
  1,706,367
  1,783,148
  1,864,276
  1,949,934
  2,040,319
  2,135,638
  2,236,110
  2,341,970
  2,453,464
  2,570,853
  2,694,413
  2,824,433
  2,961,220
  3,105,098
  3,256,403
Debt-to-equity ratio
  1.533
  14.380
  14.240
  14.100
  13.950
  13.790
  13.640
  13.480
  13.320
  13.160
  13.000
  12.840
  12.690
  12.540
  12.390
  12.250
  12.110
  11.980
  11.850
  11.720
  11.600
  11.490
  11.380
  11.270
  11.170
  11.070
  10.970
  10.880
  10.790
  10.710
  10.630
Adjusted equity ratio
  0.126
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  14,912
  -59,690
  -53,113
  -53,279
  -53,409
  -53,502
  -53,558
  -53,576
  -53,554
  -53,492
  -53,386
  -47,102
  -46,906
  -46,661
  -46,366
  -46,016
  -45,611
  -45,146
  -44,619
  -44,027
  -43,365
  -42,630
  -41,818
  -40,925
  -39,946
  -38,876
  -37,711
  -36,445
  -35,072
  -33,586
  -31,981
Depreciation, amort., depletion, $m
  3,720
  198,104
  203,038
  208,576
  214,714
  221,448
  228,781
  236,718
  245,270
  254,447
  264,265
  268,608
  279,762
  291,617
  304,196
  317,527
  331,638
  346,561
  362,329
  378,977
  396,543
  415,069
  434,596
  455,170
  476,840
  499,655
  523,669
  548,939
  575,524
  603,487
  632,894
Funds from operations, $m
  80,498
  138,414
  149,924
  155,297
  161,305
  167,946
  175,222
  183,142
  191,715
  200,956
  210,879
  221,505
  232,856
  244,956
  257,831
  271,511
  286,028
  301,415
  317,709
  334,950
  353,178
  372,439
  392,778
  414,245
  436,894
  460,778
  485,958
  512,494
  540,452
  569,901
  600,912
Change in working capital, $m
  26,566
  -37,108
  -42,418
  -47,622
  -52,768
  -57,897
  -63,046
  -68,245
  -73,523
  -78,905
  -84,414
  -90,073
  -95,903
  -101,924
  -108,154
  -114,615
  -121,324
  -128,301
  -135,565
  -143,135
  -151,032
  -159,277
  -167,889
  -176,891
  -186,306
  -196,157
  -206,467
  -217,263
  -228,571
  -240,417
  -252,831
Cash from operations, $m
  53,932
  175,522
  192,342
  202,919
  214,073
  225,843
  238,268
  251,387
  265,238
  279,860
  295,293
  311,579
  328,759
  346,879
  365,985
  386,126
  407,352
  429,716
  453,274
  478,085
  504,211
  531,715
  560,667
  591,137
  623,200
  656,935
  692,425
  729,757
  769,023
  810,318
  853,744
Maintenance CAPEX, $m
  0
  -187,652
  -191,970
  -196,903
  -202,442
  -208,580
  -215,314
  -222,647
  -230,584
  -239,136
  -248,313
  -258,131
  -268,608
  -279,762
  -291,617
  -304,196
  -317,527
  -331,638
  -346,561
  -362,329
  -378,977
  -396,543
  -415,069
  -434,596
  -455,170
  -476,840
  -499,655
  -523,669
  -548,939
  -575,524
  -603,487
New CAPEX, $m
  -2,756
  -43,179
  -49,336
  -55,389
  -61,374
  -67,341
  -73,329
  -79,376
  -85,514
  -91,774
  -98,182
  -104,764
  -111,545
  -118,548
  -125,795
  -133,309
  -141,112
  -149,227
  -157,675
  -166,481
  -175,666
  -185,255
  -195,272
  -205,743
  -216,693
  -228,150
  -240,142
  -252,699
  -265,851
  -279,630
  -294,069
Cash from investing activities, $m
  -79,588
  -230,831
  -241,306
  -252,292
  -263,816
  -275,921
  -288,643
  -302,023
  -316,098
  -330,910
  -346,495
  -362,895
  -380,153
  -398,310
  -417,412
  -437,505
  -458,639
  -480,865
  -504,236
  -528,810
  -554,643
  -581,798
  -610,341
  -640,339
  -671,863
  -704,990
  -739,797
  -776,368
  -814,790
  -855,154
  -897,556
Free cash flow, $m
  -25,656
  -55,309
  -48,964
  -49,373
  -49,744
  -50,077
  -50,374
  -50,635
  -50,860
  -51,049
  -51,202
  -51,317
  -51,394
  -51,430
  -51,426
  -51,379
  -51,288
  -51,150
  -50,963
  -50,724
  -50,432
  -50,083
  -49,674
  -49,202
  -48,664
  -48,055
  -47,372
  -46,611
  -45,767
  -44,835
  -43,812
Issuance/(repayment) of debt, $m
  17,968
  -105,529
  22,846
  25,649
  28,421
  31,184
  33,957
  36,757
  39,599
  42,498
  45,466
  48,514
  51,654
  54,896
  58,252
  61,732
  65,345
  69,103
  73,015
  77,093
  81,346
  85,787
  90,425
  95,274
  100,345
  105,650
  111,204
  117,018
  123,108
  129,489
  136,175
Issuance/(repurchase) of shares, $m
  -6,792
  193,132
  55,652
  56,129
  56,567
  56,967
  57,331
  57,660
  57,954
  58,214
  58,438
  52,493
  52,645
  52,761
  52,838
  52,875
  52,871
  52,824
  52,732
  52,593
  52,403
  52,162
  51,865
  51,511
  51,095
  50,615
  50,067
  49,447
  48,750
  47,974
  47,112
Cash from financing (excl. dividends), $m  
  30,579
  87,603
  78,498
  81,778
  84,988
  88,151
  91,288
  94,417
  97,553
  100,712
  103,904
  101,007
  104,299
  107,657
  111,090
  114,607
  118,216
  121,927
  125,747
  129,686
  133,749
  137,949
  142,290
  146,785
  151,440
  156,265
  161,271
  166,465
  171,858
  177,463
  183,287
Total cash flow (excl. dividends), $m
  4,430
  32,293
  29,534
  32,405
  35,244
  38,074
  40,914
  43,782
  46,693
  49,662
  52,702
  49,689
  52,905
  56,227
  59,664
  63,228
  66,929
  70,778
  74,785
  78,961
  83,318
  87,866
  92,617
  97,583
  102,777
  108,211
  113,899
  119,854
  126,092
  132,627
  139,476
Retained Cash Flow (-), $m
  -3,263
  -193,132
  -55,652
  -56,129
  -56,567
  -56,967
  -57,331
  -57,660
  -57,954
  -58,214
  -58,438
  -52,493
  -52,645
  -52,761
  -52,838
  -52,875
  -52,871
  -52,824
  -52,732
  -52,593
  -52,403
  -52,162
  -51,865
  -51,511
  -51,095
  -50,615
  -50,067
  -49,447
  -48,750
  -47,974
  -47,112
Prev. year cash balance distribution, $m
 
  34,668
  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
 
  -126,170
  -26,118
  -23,724
  -21,323
  -18,894
  -16,418
  -13,878
  -11,261
  -8,551
  -5,736
  -2,803
  260
  3,466
  6,826
  10,352
  14,057
  17,953
  22,053
  26,369
  30,914
  35,704
  40,751
  46,072
  51,681
  57,595
  63,832
  70,408
  77,342
  84,654
  92,364
Discount rate, %
 
  15.10
  15.86
  16.65
  17.48
  18.35
  19.27
  20.24
  21.25
  22.31
  23.43
  24.60
  25.83
  27.12
  28.47
  29.90
  31.39
  32.96
  34.61
  36.34
  38.16
  40.06
  42.07
  44.17
  46.38
  48.70
  51.13
  53.69
  56.38
  59.19
  62.15
PV of cash for distribution, $m
 
  -109,618
  -19,458
  -14,947
  -11,194
  -8,136
  -5,703
  -3,820
  -2,411
  -1,396
  -699
  -250
  17
  153
  205
  205
  178
  142
  105
  73
  48
  30
  18
  10
  6
  3
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  32.0
  20.6
  13.3
  8.7
  5.7
  3.8
  2.6
  1.7
  1.2
  0.9
  0.6
  0.5
  0.3
  0.3
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Citigroup Inc. (Citi) is a financial services holding company. The Company's whose businesses provide consumers, corporations, governments and institutions with a range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, trade and securities services and wealth management. The Company operates through two segments: Citicorp and Citi Holdings. Citicorp is the Company's global bank for consumers and businesses and represents its core franchises. Citicorp is focused on providing products and services to customers and leveraging the Company's global network, including various economies. As of December 31, 2016, Citicorp was present in 97 countries and jurisdictions, and offered services in over 160 countries and jurisdictions. Global Consumer Banking (GCB) provides traditional banking services to retail customers through retail banking, including Citi-branded cards and Citi retail services.

FINANCIAL RATIOS  of  Citigroup (C)

Valuation Ratios
P/E Ratio 12.9
Price to Sales 0
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 3.6
Price to Free Cash Flow 3.7
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -13.8%
Cap. Spend. - 3 Yr. Gr. Rate -4.6%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 153.3%
Total Debt to Equity 153.3%
Interest Coverage 3
Management Effectiveness
Return On Assets 1.3%
Ret/ On Assets - 3 Yr. Avg. 1.2%
Return On Total Capital 2.6%
Ret/ On T. Cap. - 3 Yr. Avg. 2.2%
Return On Equity 6.7%
Return On Equity - 3 Yr. Avg. 6.1%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 30%
Eff/ Tax Rate - 3 Yr. Avg. 36.3%
Payout Ratio 15.3%

C stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the C stock intrinsic value calculation we used $71449 million for the last fiscal year's total revenue generated by Citigroup. The default revenue input number comes from 2016 income statement of Citigroup. 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 C stock valuation model: a) initial revenue growth rate of 2.3% 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 15.1%, whose default value for C is calculated based on our internal credit rating of Citigroup, 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 Citigroup.
    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 C stock the variable cost ratio is equal to 18.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $36290 million in the base year in the intrinsic value calculation for C 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 5.4% for Citigroup.

Corporate tax rate of 27% is the nominal tax rate for Citigroup. 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 C 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 C are equal to 2626.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Citigroup 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 C is equal to -2258.1%. 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 - $0 million for Citigroup - 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 2699 million for Citigroup 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 Citigroup at the current share price and the inputted number of shares is $186.8 billion.

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Financial statements of C
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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