Intrinsic value of Sony ADR - SNE

Previous Close

$52.95

  Intrinsic Value

$52.16

stock screener

  Rating & Target

hold

-1%

Previous close

$52.95

 
Intrinsic value

$52.16

 
Up/down potential

-1%

 
Rating

hold

We calculate the intrinsic value of SNE 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
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -6.20
  2.00
  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
Revenue, $m
  66,190
  69,190
  70,781
  72,600
  74,642
  76,905
  79,388
  82,092
  85,019
  88,172
  91,555
  95,175
  99,038
  103,151
  107,522
  112,160
  117,075
  122,278
  127,780
  133,594
  139,732
  146,209
  153,040
  160,240
  167,826
  175,815
  184,227
  193,082
  202,399
  212,201
  222,511
Variable operating expenses, $m
 
  66,679
  68,190
  69,917
  71,856
  74,005
  76,362
  78,929
  81,708
  84,701
  87,914
  90,364
  94,031
  97,936
  102,086
  106,490
  111,156
  116,096
  121,320
  126,840
  132,668
  138,817
  145,303
  152,139
  159,341
  166,927
  174,913
  183,320
  192,166
  201,473
  211,262
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
  63,677
  66,679
  68,190
  69,917
  71,856
  74,005
  76,362
  78,929
  81,708
  84,701
  87,914
  90,364
  94,031
  97,936
  102,086
  106,490
  111,156
  116,096
  121,320
  126,840
  132,668
  138,817
  145,303
  152,139
  159,341
  166,927
  174,913
  183,320
  192,166
  201,473
  211,262
Operating income, $m
  2,513
  2,511
  2,591
  2,683
  2,786
  2,901
  3,026
  3,163
  3,311
  3,470
  3,641
  4,812
  5,007
  5,215
  5,436
  5,670
  5,919
  6,182
  6,460
  6,754
  7,064
  7,392
  7,737
  8,101
  8,485
  8,889
  9,314
  9,761
  10,233
  10,728
  11,249
EBITDA, $m
  5,360
  5,276
  5,398
  5,536
  5,692
  5,865
  6,054
  6,260
  6,483
  6,724
  6,982
  7,258
  7,552
  7,866
  8,199
  8,553
  8,928
  9,324
  9,744
  10,187
  10,655
  11,149
  11,670
  12,219
  12,798
  13,407
  14,049
  14,724
  15,434
  16,182
  16,968
Interest expense (income), $m
  121
  578
  719
  890
  1,086
  1,306
  1,550
  1,817
  2,108
  2,423
  2,762
  3,126
  3,516
  3,932
  4,374
  4,845
  5,344
  5,873
  6,433
  7,025
  7,651
  8,311
  9,008
  9,743
  10,518
  11,335
  12,195
  13,100
  14,053
  15,056
  16,111
Earnings before tax, $m
  2,190
  1,933
  1,872
  1,793
  1,700
  1,595
  1,477
  1,346
  1,203
  1,047
  879
  1,685
  1,491
  1,283
  1,062
  826
  575
  309
  27
  -271
  -586
  -919
  -1,271
  -1,642
  -2,034
  -2,446
  -2,881
  -3,339
  -3,820
  -4,328
  -4,861
Tax expense, $m
  1,080
  522
  505
  484
  459
  431
  399
  363
  325
  283
  237
  455
  403
  346
  287
  223
  155
  83
  7
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  638
  1,411
  1,366
  1,309
  1,241
  1,164
  1,078
  983
  878
  765
  642
  1,230
  1,089
  937
  775
  603
  420
  226
  20
  -271
  -586
  -919
  -1,271
  -1,642
  -2,034
  -2,446
  -2,881
  -3,339
  -3,820
  -4,328
  -4,861

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  17,512
  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
  153,744
  160,533
  164,225
  168,446
  173,184
  178,434
  184,195
  190,468
  197,259
  204,574
  212,425
  220,825
  229,787
  239,329
  249,471
  260,232
  271,636
  283,708
  296,474
  309,963
  324,205
  339,233
  355,081
  371,786
  389,386
  407,924
  427,442
  447,985
  469,603
  492,346
  516,267
Adjusted assets (=assets-cash), $m
  136,232
  160,533
  164,225
  168,446
  173,184
  178,434
  184,195
  190,468
  197,259
  204,574
  212,425
  220,825
  229,787
  239,329
  249,471
  260,232
  271,636
  283,708
  296,474
  309,963
  324,205
  339,233
  355,081
  371,786
  389,386
  407,924
  427,442
  447,985
  469,603
  492,346
  516,267
Revenue / Adjusted assets
  0.486
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
Average production assets, $m
  12,097
  17,782
  18,191
  18,658
  19,183
  19,765
  20,403
  21,098
  21,850
  22,660
  23,530
  24,460
  25,453
  26,510
  27,633
  28,825
  30,088
  31,426
  32,840
  34,334
  35,911
  37,576
  39,331
  41,182
  43,131
  45,185
  47,346
  49,622
  52,017
  54,536
  57,185
Working capital, $m
  -7,539
  -11,762
  -12,033
  -12,342
  -12,689
  -13,074
  -13,496
  -13,956
  -14,453
  -14,989
  -15,564
  -16,180
  -16,836
  -17,536
  -18,279
  -19,067
  -19,903
  -20,787
  -21,723
  -22,711
  -23,754
  -24,856
  -26,017
  -27,241
  -28,530
  -29,889
  -31,319
  -32,824
  -34,408
  -36,074
  -37,827
Total debt, $m
  10,443
  13,318
  16,490
  20,116
  24,186
  28,696
  33,644
  39,033
  44,866
  51,150
  57,894
  65,109
  72,808
  81,005
  89,716
  98,960
  108,756
  119,126
  130,092
  141,679
  153,913
  166,822
  180,435
  194,785
  209,904
  225,827
  242,593
  260,240
  278,810
  298,346
  318,894
Total liabilities, $m
  132,004
  137,898
  141,069
  144,695
  148,765
  153,275
  158,224
  163,612
  169,445
  175,729
  182,473
  189,688
  197,387
  205,584
  214,295
  223,539
  233,336
  243,705
  254,671
  266,258
  278,492
  291,401
  305,014
  319,364
  334,483
  350,407
  367,172
  384,819
  403,389
  422,925
  443,474
Total equity, $m
  21,740
  22,635
  23,156
  23,751
  24,419
  25,159
  25,972
  26,856
  27,813
  28,845
  29,952
  31,136
  32,400
  33,745
  35,175
  36,693
  38,301
  40,003
  41,803
  43,705
  45,713
  47,832
  50,066
  52,422
  54,903
  57,517
  60,269
  63,166
  66,214
  69,421
  72,794
Total liabilities and equity, $m
  153,744
  160,533
  164,225
  168,446
  173,184
  178,434
  184,196
  190,468
  197,258
  204,574
  212,425
  220,824
  229,787
  239,329
  249,470
  260,232
  271,637
  283,708
  296,474
  309,963
  324,205
  339,233
  355,080
  371,786
  389,386
  407,924
  427,441
  447,985
  469,603
  492,346
  516,268
Debt-to-equity ratio
  0.480
  0.590
  0.710
  0.850
  0.990
  1.140
  1.300
  1.450
  1.610
  1.770
  1.930
  2.090
  2.250
  2.400
  2.550
  2.700
  2.840
  2.980
  3.110
  3.240
  3.370
  3.490
  3.600
  3.720
  3.820
  3.930
  4.030
  4.120
  4.210
  4.300
  4.380
Adjusted equity ratio
  0.061
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  638
  1,411
  1,366
  1,309
  1,241
  1,164
  1,078
  983
  878
  765
  642
  1,230
  1,089
  937
  775
  603
  420
  226
  20
  -271
  -586
  -919
  -1,271
  -1,642
  -2,034
  -2,446
  -2,881
  -3,339
  -3,820
  -4,328
  -4,861
Depreciation, amort., depletion, $m
  2,847
  2,766
  2,806
  2,853
  2,906
  2,964
  3,028
  3,097
  3,172
  3,253
  3,340
  2,446
  2,545
  2,651
  2,763
  2,883
  3,009
  3,143
  3,284
  3,433
  3,591
  3,758
  3,933
  4,118
  4,313
  4,518
  4,735
  4,962
  5,202
  5,454
  5,719
Funds from operations, $m
  7,049
  4,176
  4,173
  4,162
  4,147
  4,128
  4,106
  4,080
  4,051
  4,018
  3,982
  3,676
  3,634
  3,588
  3,538
  3,485
  3,429
  3,368
  3,304
  3,162
  3,005
  2,838
  2,662
  2,476
  2,279
  2,072
  1,854
  1,624
  1,381
  1,126
  857
Change in working capital, $m
  4
  -231
  -271
  -309
  -347
  -385
  -422
  -460
  -498
  -536
  -575
  -615
  -657
  -699
  -743
  -788
  -836
  -884
  -935
  -988
  -1,044
  -1,101
  -1,161
  -1,224
  -1,290
  -1,358
  -1,430
  -1,505
  -1,584
  -1,666
  -1,753
Cash from operations, $m
  7,045
  4,407
  4,443
  4,471
  4,494
  4,513
  4,528
  4,539
  4,548
  4,554
  4,557
  4,292
  4,290
  4,287
  4,281
  4,274
  4,264
  4,253
  4,239
  4,151
  4,048
  3,939
  3,823
  3,700
  3,569
  3,430
  3,284
  3,129
  2,965
  2,792
  2,610
Maintenance CAPEX, $m
  0
  -1,741
  -1,778
  -1,819
  -1,866
  -1,918
  -1,976
  -2,040
  -2,110
  -2,185
  -2,266
  -2,353
  -2,446
  -2,545
  -2,651
  -2,763
  -2,883
  -3,009
  -3,143
  -3,284
  -3,433
  -3,591
  -3,758
  -3,933
  -4,118
  -4,313
  -4,518
  -4,735
  -4,962
  -5,202
  -5,454
New CAPEX, $m
  -2,903
  -367
  -409
  -468
  -525
  -582
  -638
  -695
  -752
  -810
  -870
  -930
  -993
  -1,057
  -1,123
  -1,192
  -1,263
  -1,337
  -1,414
  -1,494
  -1,578
  -1,665
  -1,755
  -1,850
  -1,950
  -2,053
  -2,162
  -2,276
  -2,395
  -2,519
  -2,650
Cash from investing activities, $m
  -10,916
  -2,108
  -2,187
  -2,287
  -2,391
  -2,500
  -2,614
  -2,735
  -2,862
  -2,995
  -3,136
  -3,283
  -3,439
  -3,602
  -3,774
  -3,955
  -4,146
  -4,346
  -4,557
  -4,778
  -5,011
  -5,256
  -5,513
  -5,783
  -6,068
  -6,366
  -6,680
  -7,011
  -7,357
  -7,721
  -8,104
Free cash flow, $m
  -3,871
  2,299
  2,256
  2,184
  2,103
  2,013
  1,913
  1,804
  1,686
  1,559
  1,422
  1,008
  852
  685
  507
  318
  118
  -93
  -317
  -627
  -963
  -1,317
  -1,690
  -2,084
  -2,499
  -2,936
  -3,396
  -3,881
  -4,392
  -4,928
  -5,493
Issuance/(repayment) of debt, $m
  2,709
  2,617
  3,172
  3,625
  4,070
  4,510
  4,949
  5,389
  5,833
  6,284
  6,744
  7,215
  7,699
  8,197
  8,711
  9,244
  9,796
  10,370
  10,966
  11,587
  12,234
  12,909
  13,613
  14,350
  15,119
  15,924
  16,766
  17,647
  18,570
  19,536
  20,549
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  79
  267
  465
  0
  175
  409
  655
  915
  1,188
  1,476
  1,780
  2,173
  2,594
  3,038
  3,506
  3,998
  4,515
  5,060
  5,633
  6,235
  6,869
  7,534
  8,234
Cash from financing (excl. dividends), $m  
  4,158
  2,617
  3,172
  3,625
  4,070
  4,510
  4,949
  5,389
  5,912
  6,551
  7,209
  7,215
  7,874
  8,606
  9,366
  10,159
  10,984
  11,846
  12,746
  13,760
  14,828
  15,947
  17,119
  18,348
  19,634
  20,984
  22,399
  23,882
  25,439
  27,070
  28,783
Total cash flow (excl. dividends), $m
  16
  4,915
  5,428
  5,810
  6,173
  6,523
  6,862
  7,193
  7,598
  8,110
  8,631
  8,223
  8,726
  9,290
  9,873
  10,477
  11,103
  11,753
  12,429
  13,132
  13,866
  14,631
  15,429
  16,264
  17,136
  18,048
  19,002
  20,001
  21,047
  22,142
  23,290
Retained Cash Flow (-), $m
  -295
  -355
  -521
  -595
  -668
  -740
  -812
  -885
  -957
  -1,031
  -1,107
  -1,184
  -1,264
  -1,345
  -1,430
  -1,517
  -1,608
  -1,702
  -1,800
  -2,173
  -2,594
  -3,038
  -3,506
  -3,998
  -4,515
  -5,060
  -5,633
  -6,235
  -6,869
  -7,534
  -8,234
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
 
  4,560
  4,907
  5,215
  5,505
  5,783
  6,049
  6,308
  6,641
  7,078
  7,524
  7,039
  7,462
  7,945
  8,444
  8,960
  9,495
  10,051
  10,629
  10,959
  11,271
  11,592
  11,924
  12,266
  12,620
  12,988
  13,369
  13,766
  14,178
  14,608
  15,055
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  4,372
  4,492
  4,538
  4,533
  4,482
  4,390
  4,262
  4,151
  4,066
  3,945
  3,343
  3,184
  3,021
  2,835
  2,630
  2,413
  2,187
  1,957
  1,687
  1,432
  1,199
  989
  804
  643
  505
  390
  295
  219
  159
  113
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  99.9
  99.6
  99.1
  99.1
  99.0
  98.6
  98.0
  97.2
  96.3
  95.1
  93.9
  92.4
  90.7
  88.9
  87.0
  84.9
  82.7
  80.4
  78.1
  75.7
  73.3
  70.8
  68.3

Sony Corporation (Sony) is engaged in the development, design, manufacture and sale of various kinds of electronic equipment, instruments and devices for consumer, professional and industrial markets, as well as game consoles and software. The Company's segments include Mobile Communications, Game & Network Services, Imaging Products & Solutions, Home Entertainment & Sound, Devices, Pictures, Music, Financial Services and All Other. It is engaged in the production, acquisition and distribution of motion pictures and television programming and the operation of television and digital networks. It is also engaged in the development, production, manufacture and distribution of recorded music and the management and licensing of the words and music of songs. It is also engaged in various financial services businesses, including life and non-life insurance operations, through its Japanese insurance subsidiaries and banking operations through a Japanese Internet-based banking subsidiary.

FINANCIAL RATIOS  of  Sony ADR (SNE)

Valuation Ratios
P/E Ratio 104.8
Price to Sales 1
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 9.5
Price to Free Cash Flow 16.1
Growth Rates
Sales Growth Rate -6.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.2%
Cap. Spend. - 3 Yr. Gr. Rate 3.3%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 27.3%
Total Debt to Equity 48%
Interest Coverage 19
Management Effectiveness
Return On Assets 0.5%
Ret/ On Assets - 3 Yr. Avg. 0.2%
Return On Total Capital 2.1%
Ret/ On T. Cap. - 3 Yr. Avg. 0.9%
Return On Equity 3%
Return On Equity - 3 Yr. Avg. 1.2%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 31.4%
Gross Margin - 3 Yr. Avg. 31%
EBITDA Margin 7.8%
EBITDA Margin - 3 Yr. Avg. 7.3%
Operating Margin 3.8%
Oper. Margin - 3 Yr. Avg. 2.8%
Pre-Tax Margin 3.3%
Pre-Tax Margin - 3 Yr. Avg. 2.5%
Net Profit Margin 1%
Net Profit Margin - 3 Yr. Avg. 0.4%
Effective Tax Rate 49.3%
Eff/ Tax Rate - 3 Yr. Avg. 101.3%
Payout Ratio 34.5%

SNE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SNE stock intrinsic value calculation we used $67833 million for the last fiscal year's total revenue generated by Sony ADR. The default revenue input number comes from 2017 income statement of Sony ADR. 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 SNE stock valuation model: a) initial revenue growth rate of 2% 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 4.3%, whose default value for SNE is calculated based on our internal credit rating of Sony ADR, 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 Sony ADR.
    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 SNE stock the variable cost ratio is equal to 96.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for SNE 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 Sony ADR.

Corporate tax rate of 27% is the nominal tax rate for Sony ADR. 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 SNE 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 SNE are equal to 25.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Sony ADR 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 SNE is equal to -17%. 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 - $22280 million for Sony ADR - 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 1373 million for Sony ADR 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 Sony ADR at the current share price and the inputted number of shares is $72.7 billion.

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Financial statements of SNE
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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