Intrinsic value of CBS Cl A - CBS-A

Previous Close

$58.05

  Intrinsic Value

$74.92

stock screener

  Rating & Target

buy

+29%

Previous close

$58.05

 
Intrinsic value

$74.92

 
Up/down potential

+29%

 
Rating

buy

We calculate the intrinsic value of CBS-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 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 23.1

 

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, %
  3.91
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
Revenue, $m
  13,166
  14,404
  15,694
  17,038
  18,437
  19,891
  21,402
  22,973
  24,605
  26,301
  28,064
  29,898
  31,806
  33,791
  35,859
  38,013
  40,258
  42,599
  45,041
  47,591
  50,253
  53,035
  55,942
  58,981
  62,161
  65,487
  68,968
  72,612
  76,429
  80,426
  84,614
Variable operating expenses, $m
 
  11,333
  12,305
  13,317
  14,370
  15,465
  16,603
  17,786
  19,015
  20,292
  21,620
  22,515
  23,952
  25,447
  27,004
  28,626
  30,316
  32,079
  33,919
  35,839
  37,844
  39,938
  42,127
  44,416
  46,810
  49,315
  51,937
  54,681
  57,555
  60,565
  63,719
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
  10,545
  11,333
  12,305
  13,317
  14,370
  15,465
  16,603
  17,786
  19,015
  20,292
  21,620
  22,515
  23,952
  25,447
  27,004
  28,626
  30,316
  32,079
  33,919
  35,839
  37,844
  39,938
  42,127
  44,416
  46,810
  49,315
  51,937
  54,681
  57,555
  60,565
  63,719
Operating income, $m
  2,621
  3,070
  3,389
  3,721
  4,066
  4,425
  4,799
  5,187
  5,590
  6,008
  6,444
  7,383
  7,854
  8,345
  8,855
  9,387
  9,941
  10,520
  11,123
  11,752
  12,410
  13,097
  13,815
  14,565
  15,350
  16,172
  17,031
  17,931
  18,874
  19,861
  20,895
EBITDA, $m
  2,846
  3,754
  4,090
  4,440
  4,805
  5,184
  5,578
  5,987
  6,412
  6,854
  7,314
  7,792
  8,289
  8,806
  9,345
  9,907
  10,492
  11,102
  11,738
  12,403
  13,097
  13,821
  14,579
  15,371
  16,200
  17,067
  17,974
  18,924
  19,918
  20,960
  22,051
Interest expense (income), $m
  407
  409
  496
  586
  681
  779
  881
  987
  1,097
  1,211
  1,330
  1,454
  1,582
  1,716
  1,855
  2,000
  2,151
  2,309
  2,473
  2,644
  2,823
  3,010
  3,205
  3,408
  3,621
  3,844
  4,078
  4,322
  4,577
  4,845
  5,125
Earnings before tax, $m
  2,230
  2,661
  2,893
  3,135
  3,386
  3,647
  3,918
  4,200
  4,493
  4,797
  5,114
  5,929
  6,272
  6,629
  7,000
  7,387
  7,790
  8,211
  8,650
  9,108
  9,587
  10,087
  10,610
  11,157
  11,729
  12,327
  12,954
  13,609
  14,296
  15,016
  15,770
Tax expense, $m
  628
  718
  781
  846
  914
  985
  1,058
  1,134
  1,213
  1,295
  1,381
  1,601
  1,693
  1,790
  1,890
  1,994
  2,103
  2,217
  2,335
  2,459
  2,588
  2,724
  2,865
  3,012
  3,167
  3,328
  3,497
  3,675
  3,860
  4,054
  4,258
Net income, $m
  1,261
  1,943
  2,112
  2,288
  2,472
  2,662
  2,860
  3,066
  3,280
  3,502
  3,733
  4,328
  4,579
  4,839
  5,110
  5,392
  5,687
  5,994
  6,314
  6,649
  6,998
  7,364
  7,745
  8,144
  8,562
  8,999
  9,456
  9,935
  10,436
  10,962
  11,512

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  598
  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
  24,238
  25,859
  28,176
  30,589
  33,100
  35,710
  38,424
  41,243
  44,174
  47,219
  50,385
  53,677
  57,102
  60,667
  64,379
  68,246
  72,276
  76,479
  80,864
  85,442
  90,221
  95,215
  100,434
  105,891
  111,599
  117,570
  123,820
  130,363
  137,215
  144,392
  151,911
Adjusted assets (=assets-cash), $m
  23,640
  25,859
  28,176
  30,589
  33,100
  35,710
  38,424
  41,243
  44,174
  47,219
  50,385
  53,677
  57,102
  60,667
  64,379
  68,246
  72,276
  76,479
  80,864
  85,442
  90,221
  95,215
  100,434
  105,891
  111,599
  117,570
  123,820
  130,363
  137,215
  144,392
  151,911
Revenue / Adjusted assets
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
  0.557
Average production assets, $m
  5,397
  5,905
  6,435
  6,986
  7,559
  8,155
  8,775
  9,419
  10,088
  10,783
  11,506
  12,258
  13,040
  13,854
  14,702
  15,585
  16,506
  17,466
  18,467
  19,512
  20,604
  21,744
  22,936
  24,182
  25,486
  26,850
  28,277
  29,771
  31,336
  32,975
  34,692
Working capital, $m
  2,355
  2,434
  2,652
  2,879
  3,116
  3,362
  3,617
  3,882
  4,158
  4,445
  4,743
  5,053
  5,375
  5,711
  6,060
  6,424
  6,804
  7,199
  7,612
  8,043
  8,493
  8,963
  9,454
  9,968
  10,505
  11,067
  11,656
  12,271
  12,916
  13,592
  14,300
Total debt, $m
  9,375
  10,781
  12,748
  14,796
  16,928
  19,144
  21,448
  23,842
  26,329
  28,915
  31,603
  34,398
  37,306
  40,332
  43,483
  46,766
  50,188
  53,757
  57,480
  61,366
  65,424
  69,664
  74,095
  78,728
  83,573
  88,643
  93,949
  99,504
  105,322
  111,415
  117,798
Total liabilities, $m
  20,549
  21,955
  23,922
  25,970
  28,102
  30,318
  32,622
  35,016
  37,503
  40,089
  42,777
  45,572
  48,480
  51,506
  54,657
  57,940
  61,362
  64,931
  68,654
  72,540
  76,598
  80,838
  85,269
  89,902
  94,747
  99,817
  105,123
  110,678
  116,496
  122,589
  128,972
Total equity, $m
  3,689
  3,905
  4,255
  4,619
  4,998
  5,392
  5,802
  6,228
  6,670
  7,130
  7,608
  8,105
  8,622
  9,161
  9,721
  10,305
  10,914
  11,548
  12,211
  12,902
  13,623
  14,377
  15,166
  15,990
  16,851
  17,753
  18,697
  19,685
  20,719
  21,803
  22,938
Total liabilities and equity, $m
  24,238
  25,860
  28,177
  30,589
  33,100
  35,710
  38,424
  41,244
  44,173
  47,219
  50,385
  53,677
  57,102
  60,667
  64,378
  68,245
  72,276
  76,479
  80,865
  85,442
  90,221
  95,215
  100,435
  105,892
  111,598
  117,570
  123,820
  130,363
  137,215
  144,392
  151,910
Debt-to-equity ratio
  2.541
  2.760
  3.000
  3.200
  3.390
  3.550
  3.700
  3.830
  3.950
  4.060
  4.150
  4.240
  4.330
  4.400
  4.470
  4.540
  4.600
  4.650
  4.710
  4.760
  4.800
  4.850
  4.890
  4.920
  4.960
  4.990
  5.020
  5.050
  5.080
  5.110
  5.140
Adjusted equity ratio
  0.150
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,261
  1,943
  2,112
  2,288
  2,472
  2,662
  2,860
  3,066
  3,280
  3,502
  3,733
  4,328
  4,579
  4,839
  5,110
  5,392
  5,687
  5,994
  6,314
  6,649
  6,998
  7,364
  7,745
  8,144
  8,562
  8,999
  9,456
  9,935
  10,436
  10,962
  11,512
Depreciation, amort., depletion, $m
  225
  683
  701
  719
  738
  758
  779
  800
  823
  846
  870
  409
  435
  462
  490
  520
  550
  582
  616
  650
  687
  725
  765
  806
  850
  895
  943
  992
  1,045
  1,099
  1,156
Funds from operations, $m
  1,018
  2,626
  2,813
  3,008
  3,210
  3,420
  3,639
  3,866
  4,102
  4,348
  4,603
  4,737
  5,013
  5,301
  5,600
  5,912
  6,237
  6,576
  6,930
  7,299
  7,685
  8,088
  8,510
  8,950
  9,411
  9,894
  10,399
  10,927
  11,481
  12,061
  12,668
Change in working capital, $m
  -667
  209
  218
  227
  236
  246
  255
  265
  276
  287
  298
  310
  322
  336
  349
  364
  379
  396
  413
  431
  450
  470
  491
  514
  537
  562
  588
  616
  645
  676
  708
Cash from operations, $m
  1,685
  2,417
  2,595
  2,780
  2,974
  3,175
  3,384
  3,601
  3,827
  4,061
  4,305
  4,427
  4,691
  4,965
  5,251
  5,548
  5,858
  6,180
  6,517
  6,869
  7,235
  7,618
  8,019
  8,437
  8,874
  9,332
  9,810
  10,311
  10,836
  11,385
  11,961
Maintenance CAPEX, $m
  0
  -180
  -197
  -214
  -233
  -252
  -272
  -292
  -314
  -336
  -359
  -384
  -409
  -435
  -462
  -490
  -520
  -550
  -582
  -616
  -650
  -687
  -725
  -765
  -806
  -850
  -895
  -943
  -992
  -1,045
  -1,099
New CAPEX, $m
  -196
  -509
  -529
  -551
  -573
  -596
  -620
  -644
  -669
  -695
  -723
  -752
  -782
  -814
  -848
  -883
  -920
  -960
  -1,001
  -1,045
  -1,092
  -1,140
  -1,192
  -1,246
  -1,303
  -1,364
  -1,427
  -1,494
  -1,565
  -1,639
  -1,717
Cash from investing activities, $m
  -340
  -689
  -726
  -765
  -806
  -848
  -892
  -936
  -983
  -1,031
  -1,082
  -1,136
  -1,191
  -1,249
  -1,310
  -1,373
  -1,440
  -1,510
  -1,583
  -1,661
  -1,742
  -1,827
  -1,917
  -2,011
  -2,109
  -2,214
  -2,322
  -2,437
  -2,557
  -2,684
  -2,816
Free cash flow, $m
  1,345
  1,728
  1,869
  2,015
  2,167
  2,327
  2,492
  2,664
  2,844
  3,029
  3,223
  3,292
  3,500
  3,716
  3,941
  4,175
  4,418
  4,670
  4,934
  5,208
  5,493
  5,791
  6,102
  6,426
  6,765
  7,118
  7,488
  7,875
  8,279
  8,702
  9,144
Issuance/(repayment) of debt, $m
  2,259
  1,879
  1,967
  2,049
  2,132
  2,216
  2,304
  2,394
  2,488
  2,586
  2,688
  2,795
  2,908
  3,026
  3,151
  3,283
  3,422
  3,568
  3,723
  3,886
  4,058
  4,240
  4,431
  4,633
  4,846
  5,070
  5,306
  5,555
  5,817
  6,093
  6,383
Issuance/(repurchase) of shares, $m
  -2,976
  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  
  -758
  1,879
  1,967
  2,049
  2,132
  2,216
  2,304
  2,394
  2,488
  2,586
  2,688
  2,795
  2,908
  3,026
  3,151
  3,283
  3,422
  3,568
  3,723
  3,886
  4,058
  4,240
  4,431
  4,633
  4,846
  5,070
  5,306
  5,555
  5,817
  6,093
  6,383
Total cash flow (excl. dividends), $m
  587
  3,606
  3,836
  4,064
  4,299
  4,543
  4,796
  5,058
  5,331
  5,615
  5,910
  6,087
  6,408
  6,743
  7,092
  7,458
  7,840
  8,239
  8,657
  9,094
  9,551
  10,031
  10,533
  11,059
  11,610
  12,188
  12,794
  13,430
  14,096
  14,795
  15,528
Retained Cash Flow (-), $m
  1,874
  -341
  -350
  -364
  -379
  -394
  -410
  -426
  -442
  -460
  -478
  -497
  -517
  -538
  -560
  -584
  -609
  -635
  -662
  -691
  -722
  -754
  -788
  -824
  -862
  -902
  -944
  -988
  -1,035
  -1,084
  -1,135
Prev. year cash balance distribution, $m
 
  125
  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
 
  3,391
  3,486
  3,699
  3,920
  4,149
  4,386
  4,633
  4,889
  5,155
  5,432
  5,590
  5,891
  6,204
  6,532
  6,874
  7,231
  7,604
  7,994
  8,403
  8,830
  9,277
  9,745
  10,235
  10,749
  11,287
  11,851
  12,442
  13,061
  13,711
  14,393
Discount rate, %
 
  8.90
  9.35
  9.81
  10.30
  10.82
  11.36
  11.93
  12.52
  13.15
  13.81
  14.50
  15.22
  15.98
  16.78
  17.62
  18.50
  19.43
  20.40
  21.42
  22.49
  23.61
  24.80
  26.03
  27.34
  28.70
  30.14
  31.65
  33.23
  34.89
  36.63
PV of cash for distribution, $m
 
  3,113
  2,916
  2,794
  2,648
  2,482
  2,300
  2,105
  1,902
  1,696
  1,490
  1,261
  1,076
  903
  744
  602
  478
  372
  283
  210
  153
  108
  75
  50
  33
  21
  13
  7
  4
  2
  1
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

CBS Corporation is a mass media company. The Company operates through four segment: Entertainment, Cable Networks, Publishing, Local Media. The Entertainment segment comprises the CBS TV Network; CBS TV Studios; CBS Studios International and CBS TV Distribution; CBS Interactive; CBS Films; and the Company's digital streaming services, CBS All Access and CBSN. The Cable Networks segment comprises Showtime Networks, which operates its subscription program services, Showtime, The Movie Channel, and Flix. The Publishing segment comprises Simon & Schuster, which publishes and distributes consumer books under imprints such as Simon & Schuster, Pocket Books, Scribner and Gallery Books. The Local Media segment comprises CBS TV Stations, it owns 30 broadcast TV stations; and CBS Local Digital Media. Its businesses span the media and entertainment industries, including the CBS TV Network, cable networks and content production and distribution.

FINANCIAL RATIOS  of  CBS Cl A (CBS-A)

Valuation Ratios
P/E Ratio 19
Price to Sales 1.8
Price to Book 6.5
Price to Tangible Book
Price to Cash Flow 14.2
Price to Free Cash Flow 16.1
Growth Rates
Sales Growth Rate 3.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 1.6%
Cap. Spend. - 3 Yr. Gr. Rate -1.6%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 241.3%
Total Debt to Equity 254.1%
Interest Coverage 6
Management Effectiveness
Return On Assets 6.5%
Ret/ On Assets - 3 Yr. Avg. 9%
Return On Total Capital 9.3%
Ret/ On T. Cap. - 3 Yr. Avg. 12.9%
Return On Equity 27.3%
Return On Equity - 3 Yr. Avg. 28.3%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 39.6%
Gross Margin - 3 Yr. Avg. 39.5%
EBITDA Margin 21.7%
EBITDA Margin - 3 Yr. Avg. 22.4%
Operating Margin 19.9%
Oper. Margin - 3 Yr. Avg. 19.8%
Pre-Tax Margin 16.9%
Pre-Tax Margin - 3 Yr. Avg. 16.8%
Net Profit Margin 9.6%
Net Profit Margin - 3 Yr. Avg. 14.1%
Effective Tax Rate 28.2%
Eff/ Tax Rate - 3 Yr. Avg. 31.1%
Payout Ratio 22.8%

CBS-A stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CBS-A stock intrinsic value calculation we used $13166 million for the last fiscal year's total revenue generated by CBS Cl A. The default revenue input number comes from 2016 income statement of CBS Cl 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 CBS-A stock valuation model: a) initial revenue growth rate of 9.4% 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 8.9%, whose default value for CBS-A is calculated based on our internal credit rating of CBS Cl 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 CBS Cl 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 CBS-A stock the variable cost ratio is equal to 79%.

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 CBS-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 4.6% for CBS Cl A.

Corporate tax rate of 27% is the nominal tax rate for CBS Cl 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 CBS-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 CBS-A are equal to 41%.

Life of production assets of 49.2 years is the average useful life of capital assets used in CBS Cl 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 CBS-A is equal to 16.9%. 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 - $3689 million for CBS Cl 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 398.352 million for CBS Cl 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 CBS Cl A at the current share price and the inputted number of shares is $23.1 billion.

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Financial statements of CBS-A
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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