Intrinsic value of Golden Ocean Group - GOGL

Previous Close

$8.27

  Intrinsic Value

$2.20

stock screener

  Rating & Target

str. sell

-73%

Previous close

$8.27

 
Intrinsic value

$2.20

 
Up/down potential

-73%

 
Rating

str. sell

We calculate the intrinsic value of GOGL 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 1.2

 

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, %
  35.79
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  258
  413
  638
  954
  1,384
  1,952
  2,684
  3,603
  4,731
  6,088
  7,689
  9,548
  11,674
  14,071
  16,741
  19,685
  22,898
  26,377
  30,115
  34,107
  38,346
  42,827
  47,546
  52,499
  57,683
  63,098
  68,744
  74,624
  80,742
  87,103
  93,714
Variable operating expenses, $m
 
  803
  1,241
  1,856
  2,693
  3,800
  5,224
  7,011
  9,207
  11,847
  14,963
  18,581
  22,717
  27,381
  32,579
  38,307
  44,560
  51,329
  58,604
  66,372
  74,621
  83,342
  92,525
  102,163
  112,251
  122,788
  133,775
  145,218
  157,123
  169,502
  182,368
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
  338
  803
  1,241
  1,856
  2,693
  3,800
  5,224
  7,011
  9,207
  11,847
  14,963
  18,581
  22,717
  27,381
  32,579
  38,307
  44,560
  51,329
  58,604
  66,372
  74,621
  83,342
  92,525
  102,163
  112,251
  122,788
  133,775
  145,218
  157,123
  169,502
  182,368
Operating income, $m
  -80
  -391
  -603
  -902
  -1,309
  -1,847
  -2,539
  -3,408
  -4,476
  -5,759
  -7,274
  -9,033
  -11,043
  -13,311
  -15,837
  -18,622
  -21,662
  -24,952
  -28,489
  -32,265
  -36,275
  -40,515
  -44,979
  -49,664
  -54,568
  -59,690
  -65,032
  -70,594
  -76,382
  -82,399
  -88,654
EBITDA, $m
  -17
  -290
  -448
  -670
  -972
  -1,372
  -1,886
  -2,531
  -3,324
  -4,277
  -5,402
  -6,708
  -8,201
  -9,885
  -11,761
  -13,829
  -16,086
  -18,530
  -21,156
  -23,960
  -26,938
  -30,086
  -33,401
  -36,880
  -40,522
  -44,326
  -48,293
  -52,423
  -56,721
  -61,190
  -65,834
Interest expense (income), $m
  38
  40
  65
  101
  152
  221
  313
  430
  578
  760
  978
  1,236
  1,535
  1,877
  2,263
  2,693
  3,167
  3,684
  4,244
  4,845
  5,488
  6,170
  6,891
  7,651
  8,448
  9,282
  10,154
  11,063
  12,009
  12,994
  14,017
Earnings before tax, $m
  -128
  -430
  -668
  -1,003
  -1,461
  -2,068
  -2,852
  -3,839
  -5,054
  -6,519
  -8,252
  -10,268
  -12,578
  -15,188
  -18,100
  -21,315
  -24,828
  -28,636
  -32,732
  -37,110
  -41,763
  -46,685
  -51,870
  -57,315
  -63,016
  -68,973
  -75,185
  -81,657
  -88,391
  -95,393
  -102,671
Tax expense, $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
Net income, $m
  -128
  -430
  -668
  -1,003
  -1,461
  -2,068
  -2,852
  -3,839
  -5,054
  -6,519
  -8,252
  -10,268
  -12,578
  -15,188
  -18,100
  -21,315
  -24,828
  -28,636
  -32,732
  -37,110
  -41,763
  -46,685
  -51,870
  -57,315
  -63,016
  -68,973
  -75,185
  -81,657
  -88,391
  -95,393
  -102,671

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  219
  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
  2,362
  3,440
  5,315
  7,948
  11,533
  16,271
  22,369
  30,025
  39,425
  50,730
  64,076
  79,568
  97,280
  117,255
  139,511
  164,040
  190,817
  219,806
  250,958
  284,223
  319,550
  356,895
  396,218
  437,489
  480,690
  525,813
  572,865
  621,865
  672,847
  725,857
  780,954
Adjusted assets (=assets-cash), $m
  2,143
  3,440
  5,315
  7,948
  11,533
  16,271
  22,369
  30,025
  39,425
  50,730
  64,076
  79,568
  97,280
  117,255
  139,511
  164,040
  190,817
  219,806
  250,958
  284,223
  319,550
  356,895
  396,218
  437,489
  480,690
  525,813
  572,865
  621,865
  672,847
  725,857
  780,954
Revenue / Adjusted assets
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
Average production assets, $m
  880
  1,407
  2,174
  3,251
  4,718
  6,656
  9,151
  12,283
  16,128
  20,753
  26,212
  32,550
  39,795
  47,967
  57,071
  67,105
  78,060
  89,918
  102,662
  116,270
  130,722
  145,999
  162,085
  178,968
  196,641
  215,100
  234,348
  254,393
  275,248
  296,934
  319,473
Working capital, $m
  256
  67
  104
  155
  226
  318
  438
  587
  771
  992
  1,253
  1,556
  1,903
  2,294
  2,729
  3,209
  3,732
  4,299
  4,909
  5,559
  6,250
  6,981
  7,750
  8,557
  9,402
  10,285
  11,205
  12,164
  13,161
  14,198
  15,275
Total debt, $m
  1,076
  1,749
  2,727
  4,102
  5,973
  8,446
  11,629
  15,626
  20,533
  26,434
  33,401
  41,488
  50,733
  61,160
  72,778
  85,582
  99,560
  114,692
  130,953
  148,317
  166,758
  186,252
  206,779
  228,322
  250,873
  274,427
  298,988
  324,567
  351,179
  378,850
  407,611
Total liabilities, $m
  1,123
  1,796
  2,774
  4,149
  6,020
  8,493
  11,676
  15,673
  20,580
  26,481
  33,448
  41,535
  50,780
  61,207
  72,825
  85,629
  99,607
  114,739
  131,000
  148,364
  166,805
  186,299
  206,826
  228,369
  250,920
  274,474
  299,035
  324,614
  351,226
  378,897
  407,658
Total equity, $m
  1,239
  1,644
  2,540
  3,799
  5,513
  7,777
  10,692
  14,352
  18,845
  24,249
  30,629
  38,034
  46,500
  56,048
  66,686
  78,411
  91,211
  105,067
  119,958
  135,858
  152,745
  170,596
  189,392
  209,120
  229,770
  251,339
  273,829
  297,252
  321,621
  346,960
  373,296
Total liabilities and equity, $m
  2,362
  3,440
  5,314
  7,948
  11,533
  16,270
  22,368
  30,025
  39,425
  50,730
  64,077
  79,569
  97,280
  117,255
  139,511
  164,040
  190,818
  219,806
  250,958
  284,222
  319,550
  356,895
  396,218
  437,489
  480,690
  525,813
  572,864
  621,866
  672,847
  725,857
  780,954
Debt-to-equity ratio
  0.868
  1.060
  1.070
  1.080
  1.080
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
Adjusted equity ratio
  0.476
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -128
  -430
  -668
  -1,003
  -1,461
  -2,068
  -2,852
  -3,839
  -5,054
  -6,519
  -8,252
  -10,268
  -12,578
  -15,188
  -18,100
  -21,315
  -24,828
  -28,636
  -32,732
  -37,110
  -41,763
  -46,685
  -51,870
  -57,315
  -63,016
  -68,973
  -75,185
  -81,657
  -88,391
  -95,393
  -102,671
Depreciation, amort., depletion, $m
  63
  101
  155
  232
  337
  475
  654
  877
  1,152
  1,482
  1,872
  2,325
  2,843
  3,426
  4,076
  4,793
  5,576
  6,423
  7,333
  8,305
  9,337
  10,428
  11,577
  12,783
  14,046
  15,364
  16,739
  18,171
  19,661
  21,210
  22,819
Funds from operations, $m
  -24
  -330
  -513
  -771
  -1,124
  -1,593
  -2,198
  -2,961
  -3,902
  -5,036
  -6,380
  -7,943
  -9,736
  -11,762
  -14,024
  -16,521
  -19,252
  -22,213
  -25,399
  -28,805
  -32,426
  -36,256
  -40,293
  -44,531
  -48,970
  -53,608
  -58,446
  -63,486
  -68,730
  -74,183
  -79,852
Change in working capital, $m
  -1
  25
  37
  52
  70
  93
  119
  150
  184
  221
  261
  303
  346
  391
  435
  480
  524
  567
  609
  651
  691
  730
  769
  807
  845
  883
  920
  958
  997
  1,037
  1,078
Cash from operations, $m
  -23
  -355
  -549
  -822
  -1,194
  -1,685
  -2,317
  -3,111
  -4,086
  -5,257
  -6,641
  -8,246
  -10,082
  -12,152
  -14,459
  -17,001
  -19,776
  -22,780
  -26,009
  -29,456
  -33,117
  -36,987
  -41,062
  -45,338
  -49,815
  -54,491
  -59,367
  -64,444
  -69,727
  -75,220
  -80,930
Maintenance CAPEX, $m
  0
  -63
  -101
  -155
  -232
  -337
  -475
  -654
  -877
  -1,152
  -1,482
  -1,872
  -2,325
  -2,843
  -3,426
  -4,076
  -4,793
  -5,576
  -6,423
  -7,333
  -8,305
  -9,337
  -10,428
  -11,577
  -12,783
  -14,046
  -15,364
  -16,739
  -18,171
  -19,661
  -21,210
New CAPEX, $m
  -268
  -528
  -767
  -1,077
  -1,466
  -1,938
  -2,494
  -3,132
  -3,845
  -4,625
  -5,460
  -6,337
  -7,245
  -8,171
  -9,104
  -10,034
  -10,954
  -11,859
  -12,744
  -13,608
  -14,452
  -15,277
  -16,086
  -16,883
  -17,672
  -18,459
  -19,248
  -20,045
  -20,856
  -21,685
  -22,539
Cash from investing activities, $m
  -175
  -591
  -868
  -1,232
  -1,698
  -2,275
  -2,969
  -3,786
  -4,722
  -5,777
  -6,942
  -8,209
  -9,570
  -11,014
  -12,530
  -14,110
  -15,747
  -17,435
  -19,167
  -20,941
  -22,757
  -24,614
  -26,514
  -28,460
  -30,455
  -32,505
  -34,612
  -36,784
  -39,027
  -41,346
  -43,749
Free cash flow, $m
  -198
  -945
  -1,417
  -2,055
  -2,893
  -3,961
  -5,287
  -6,897
  -8,808
  -11,034
  -13,583
  -16,456
  -19,653
  -23,166
  -26,989
  -31,112
  -35,524
  -40,215
  -45,175
  -50,397
  -55,874
  -61,601
  -67,576
  -73,799
  -80,271
  -86,996
  -93,979
  -101,229
  -108,754
  -116,566
  -124,678
Issuance/(repayment) of debt, $m
  104
  678
  979
  1,375
  1,871
  2,473
  3,183
  3,997
  4,907
  5,901
  6,967
  8,087
  9,245
  10,427
  11,617
  12,804
  13,978
  15,132
  16,261
  17,364
  18,441
  19,494
  20,527
  21,543
  22,551
  23,554
  24,561
  25,578
  26,613
  27,671
  28,760
Issuance/(repurchase) of shares, $m
  205
  1,049
  1,564
  2,262
  3,174
  4,333
  5,767
  7,499
  9,547
  11,923
  14,632
  17,674
  21,044
  24,736
  28,738
  33,039
  37,628
  42,492
  47,623
  53,011
  58,650
  64,536
  70,666
  77,042
  83,666
  90,541
  97,676
  105,079
  112,760
  120,732
  129,008
Cash from financing (excl. dividends), $m  
  309
  1,727
  2,543
  3,637
  5,045
  6,806
  8,950
  11,496
  14,454
  17,824
  21,599
  25,761
  30,289
  35,163
  40,355
  45,843
  51,606
  57,624
  63,884
  70,375
  77,091
  84,030
  91,193
  98,585
  106,217
  114,095
  122,237
  130,657
  139,373
  148,403
  157,768
Total cash flow (excl. dividends), $m
  110
  782
  1,126
  1,582
  2,153
  2,846
  3,662
  4,598
  5,645
  6,790
  8,015
  9,304
  10,637
  11,997
  13,366
  14,732
  16,082
  17,410
  18,709
  19,978
  21,217
  22,429
  23,617
  24,787
  25,945
  27,100
  28,259
  29,429
  30,619
  31,837
  33,090
Retained Cash Flow (-), $m
  -80
  -1,049
  -1,564
  -2,262
  -3,174
  -4,333
  -5,767
  -7,499
  -9,547
  -11,923
  -14,632
  -17,674
  -21,044
  -24,736
  -28,738
  -33,039
  -37,628
  -42,492
  -47,623
  -53,011
  -58,650
  -64,536
  -70,666
  -77,042
  -83,666
  -90,541
  -97,676
  -105,079
  -112,760
  -120,732
  -129,008
Prev. year cash balance distribution, $m
 
  214
  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
 
  -54
  -438
  -680
  -1,022
  -1,487
  -2,104
  -2,900
  -3,901
  -5,133
  -6,616
  -8,369
  -10,407
  -12,739
  -15,372
  -18,308
  -21,546
  -25,083
  -28,914
  -33,033
  -37,433
  -42,107
  -47,050
  -52,256
  -57,720
  -63,441
  -69,418
  -75,650
  -82,141
  -88,895
  -95,918
Discount rate, %
 
  8.60
  9.03
  9.48
  9.96
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.42
  27.74
  29.12
  30.58
  32.11
  33.71
  35.40
PV of cash for distribution, $m
 
  -49
  -369
  -518
  -699
  -905
  -1,127
  -1,352
  -1,564
  -1,749
  -1,891
  -1,979
  -2,005
  -1,969
  -1,875
  -1,731
  -1,550
  -1,346
  -1,134
  -926
  -733
  -562
  -417
  -300
  -208
  -139
  -90
  -56
  -34
  -19
  -11
Current shareholders' claim on cash, %
  100
  47.8
  23.8
  12.2
  6.4
  3.5
  2.0
  1.1
  0.7
  0.4
  0.2
  0.1
  0.1
  0.1
  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
  0.0
  0.0

Golden Ocean Group Limited, formerly Knightsbridge Shipping Limited, is an international dry bulk shipping company. The Company is engaged in the transportation of dry bulk cargoes. It owns and operates a fleet of dry bulk carrier vessels, focusing on the Capesize, Panamax and Supramax markets. Its vessels transport a range of major and minor bulk commodities, including ores, coal, grains and fertilizers. Its fleet includes owned vessels, bareboat vessels, chartered vessels, commercial management vessels and newbuildings. It owns over 40 dry bulk carriers and has contracts for over 20 newbuildings. It also has over 10 vessels chartered-in (of which over eight are chartered in from Ship Finance and over five are chartered in from third parties) and over one vessel chartered-in through a joint venture. Approximately six of the vessels are chartered-out on fixed rate time charters and the other operates in the spot market or fixed on index-linked time charter contracts.

FINANCIAL RATIOS  of  Golden Ocean Group (GOGL)

Valuation Ratios
P/E Ratio -6.8
Price to Sales 3.4
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow -38.1
Price to Free Cash Flow -3
Growth Rates
Sales Growth Rate 35.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -48.4%
Cap. Spend. - 3 Yr. Gr. Rate 58.3%
Financial Strength
Quick Ratio 44
Current Ratio 0.6
LT Debt to Equity 86.4%
Total Debt to Equity 86.8%
Interest Coverage -2
Management Effectiveness
Return On Assets -4%
Ret/ On Assets - 3 Yr. Avg. -4.2%
Return On Total Capital -5.8%
Ret/ On T. Cap. - 3 Yr. Avg. -5.7%
Return On Equity -10.7%
Return On Equity - 3 Yr. Avg. -9.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 24%
Gross Margin - 3 Yr. Avg. 28.2%
EBITDA Margin -10.5%
EBITDA Margin - 3 Yr. Avg. -14%
Operating Margin -31%
Oper. Margin - 3 Yr. Avg. -35%
Pre-Tax Margin -49.6%
Pre-Tax Margin - 3 Yr. Avg. -49.8%
Net Profit Margin -49.6%
Net Profit Margin - 3 Yr. Avg. -49.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

GOGL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GOGL stock intrinsic value calculation we used $258 million for the last fiscal year's total revenue generated by Golden Ocean Group. The default revenue input number comes from 2016 income statement of Golden Ocean Group. 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 GOGL stock valuation model: a) initial revenue growth rate of 60% 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 8.6%, whose default value for GOGL is calculated based on our internal credit rating of Golden Ocean Group, 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 Golden Ocean Group.
    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 GOGL stock the variable cost ratio is equal to 194.6%.

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 GOGL 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 3.7% for Golden Ocean Group.

Corporate tax rate of 27% is the nominal tax rate for Golden Ocean Group. 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 GOGL 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 GOGL are equal to 340.9%.

Life of production assets of 14 years is the average useful life of capital assets used in Golden Ocean Group 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 GOGL is equal to 16.3%. 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 - $1239 million for Golden Ocean Group - 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 140.625 million for Golden Ocean Group 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 Golden Ocean Group at the current share price and the inputted number of shares is $1.2 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ GOGL - Capital adjustment   [Dec-05-17 11:35AM  GlobeNewswire]
▶ GOGL - Q3 2017 Presentation   [Nov-21-17 07:17AM  GlobeNewswire]
▶ GOGL - Third Quarter 2017 Results   [02:17AM  GlobeNewswire]
▶ GOGL - Invitation to presentation of Q3 2017 Results   [Nov-13-17 10:11AM  GlobeNewswire]
▶ GOGL - Equity offering: Issue of New Shares   [Oct-19-17 10:13AM  GlobeNewswire]
▶ GOGL - Equity offering successfully placed   [Oct-17-17 02:31AM  GlobeNewswire]
▶ GOGL - Announcement of commencement of equity offering   [Oct-16-17 04:04PM  GlobeNewswire]
▶ 4 Reasons These Giant Tech Stocks May Be Unstoppable   [Oct-11-17 06:00AM  Investopedia]
▶ GOGL - 2017 Annual General Meeting   [Sep-25-17 03:00AM  GlobeNewswire]
▶ GOGL - Q2 2017 Presentation   [05:47AM  GlobeNewswire]
▶ GOGL - Second Quarter 2017 Results   [02:12AM  GlobeNewswire]
▶ GOGL - Notice of Annual General Meeting 2017   [Aug-11-17 11:50AM  GlobeNewswire]
▶ GOGL - Invitation to presentation of Q2 2017 Results   [Aug-10-17 10:46AM  GlobeNewswire]
▶ Facebook launches Watch to take on TV   [10:29AM  Yahoo Finance Video]
▶ GOGL - Delivery of dry bulk vessel   [Jul-20-17 10:31AM  GlobeNewswire]
▶ GOGL - Delivery of dry bulk vessel   [Jul-17-17 10:27AM  GlobeNewswire]
▶ GOGL - 2017 Annual General Meeting   [Jul-13-17 03:34AM  GlobeNewswire]
▶ GOGL - Delivery of dry bulk vessel   [Jul-11-17 09:46AM  GlobeNewswire]
▶ GOGL - Delivery of dry bulk vessel   [Jun-21-17 10:32AM  GlobeNewswire]
▶ GOGL - Delivery of dry bulk vessel   [10:31AM  GlobeNewswire]
▶ GOGL - Delivery of dry bulk vessel   [Jun-19-17 10:58AM  GlobeNewswire]
▶ GOGL - Delivery of dry bulk vessel   [Jun-13-17 10:12AM  GlobeNewswire]
▶ GOGL - Delivery of dry bulk vessel   [Jun-01-17 11:06AM  GlobeNewswire]
▶ GOGL - Delivery of dry bulk vessel   [11:06AM  GlobeNewswire]
▶ GOGL - Q1 2017 Presentation   [05:51AM  GlobeNewswire]
▶ GOGL - First Quarter 2017 Results   [02:31AM  GlobeNewswire]
▶ GOGL - Delivery of dry bulk vessel   [May-23-17 09:02AM  GlobeNewswire]
▶ GOGL - Delivery of dry bulk vessel   [May-22-17 09:31AM  GlobeNewswire]
▶ GOGL - Invitation to presentation of Q1 2017 Results   [May-18-17 05:36AM  GlobeNewswire]
▶ GOGL - Delivery of dry bulk vessel   [May-16-17 11:17AM  GlobeNewswire]
▶ GOGL - Delivery of two dry bulk vessels   [May-15-17 09:32AM  GlobeNewswire]
▶ GOGL: Delivery of dry bulk vessel   [06:05AM  GlobeNewswire]
▶ GOGL: Delivery of dry bulk vessel   [May-03-17 02:27PM  GlobeNewswire]
▶ GOGL: Delivery of two dry bulk vessels   [Apr-27-17 09:32AM  GlobeNewswire]
▶ GOGL - Filing of 2016 Annual Report on Form 20-F   [Apr-04-17 07:52PM  GlobeNewswire]
▶ Shipping stocks rocket after analyst calls the bottom   [Mar-29-17 07:36AM  MarketWatch]
▶ Why Dry Bulk Shipping Stocks Popped Today   [12:22PM  Motley Fool]
▶ Why Dry Bulk Shipping Stocks Popped Today   [12:22PM  at Motley Fool]
▶ GOGL: Approval and publication of prospectus   [Mar-27-17 12:19PM  GlobeNewswire]
▶ GOGL: Approval and publication of prospectus   [12:18PM  GlobeNewswire]
▶ GOGL - Equity offering: Issue of New Shares   [Mar-17-17 03:41AM  GlobeNewswire]
▶ GOGL - Equity offering: Issue of New Shares   [03:41AM  GlobeNewswire]
Financial statements of GOGL
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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