Intrinsic value of Bank of New York Mellon - BK

Previous Close

$50.97

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$50.97

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

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

We calculate the intrinsic value of BK 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 2017), $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 52.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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, %
  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
  15,854
  16,218
  16,635
  17,103
  17,622
  18,191
  18,810
  19,481
  20,203
  20,979
  21,808
  22,693
  23,636
  24,637
  25,700
  26,826
  28,018
  29,279
  30,611
  32,018
  33,502
  35,067
  36,717
  38,455
  40,286
  42,213
  44,242
  46,377
  48,623
  50,985
Variable operating expenses, $m
  10,915
  11,119
  11,353
  11,616
  11,907
  12,226
  12,574
  12,950
  13,355
  13,790
  12,237
  12,734
  13,263
  13,825
  14,421
  15,053
  15,722
  16,430
  17,177
  17,966
  18,799
  19,678
  20,603
  21,579
  22,606
  23,688
  24,826
  26,024
  27,284
  28,610
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
  10,915
  11,119
  11,353
  11,616
  11,907
  12,226
  12,574
  12,950
  13,355
  13,790
  12,237
  12,734
  13,263
  13,825
  14,421
  15,053
  15,722
  16,430
  17,177
  17,966
  18,799
  19,678
  20,603
  21,579
  22,606
  23,688
  24,826
  26,024
  27,284
  28,610
Operating income, $m
  4,939
  5,099
  5,282
  5,488
  5,715
  5,965
  6,237
  6,531
  6,848
  7,188
  9,571
  9,959
  10,373
  10,812
  11,279
  11,773
  12,296
  12,849
  13,434
  14,051
  14,703
  15,389
  16,113
  16,876
  17,680
  18,526
  19,416
  20,353
  21,339
  22,375
EBITDA, $m
  45,024
  46,060
  47,244
  48,573
  50,045
  51,661
  53,420
  55,325
  57,377
  59,579
  61,934
  64,448
  67,124
  69,969
  72,987
  76,185
  79,571
  83,151
  86,935
  90,929
  95,144
  99,589
  104,274
  109,210
  114,410
  119,884
  125,645
  131,709
  138,087
  144,796
Interest expense (income), $m
  406
  11,786
  10,505
  10,782
  11,098
  11,453
  11,847
  12,279
  12,750
  13,259
  13,808
  14,396
  15,026
  15,698
  16,414
  17,174
  17,982
  18,837
  19,742
  20,699
  21,711
  22,779
  23,906
  25,095
  26,347
  27,667
  29,058
  30,521
  32,062
  33,683
  35,389
Earnings before tax, $m
  -6,847
  -5,405
  -5,499
  -5,611
  -5,738
  -5,882
  -6,043
  -6,219
  -6,411
  -6,619
  -4,826
  -5,067
  -5,326
  -5,602
  -5,896
  -6,209
  -6,541
  -6,893
  -7,265
  -7,660
  -8,077
  -8,517
  -8,981
  -9,471
  -9,988
  -10,532
  -11,105
  -11,709
  -12,344
  -13,013
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
Net income, $m
  -6,847
  -5,405
  -5,499
  -5,611
  -5,738
  -5,882
  -6,043
  -6,219
  -6,411
  -6,619
  -4,826
  -5,067
  -5,326
  -5,602
  -5,896
  -6,209
  -6,541
  -6,893
  -7,265
  -7,660
  -8,077
  -8,517
  -8,981
  -9,471
  -9,988
  -10,532
  -11,105
  -11,709
  -12,344
  -13,013

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
Total assets, $m
  247,717
  253,414
  259,927
  267,239
  275,340
  284,230
  293,910
  304,388
  315,677
  327,791
  340,752
  354,582
  369,307
  384,956
  401,561
  419,159
  437,787
  457,486
  478,300
  500,277
  523,466
  547,921
  573,699
  600,858
  629,463
  659,581
  691,281
  724,639
  759,734
  796,647
Adjusted assets (=assets-cash), $m
  247,717
  253,414
  259,927
  267,239
  275,340
  284,230
  293,910
  304,388
  315,677
  327,791
  340,752
  354,582
  369,307
  384,956
  401,561
  419,159
  437,787
  457,486
  478,300
  500,277
  523,466
  547,921
  573,699
  600,858
  629,463
  659,581
  691,281
  724,639
  759,734
  796,647
Revenue / Adjusted assets
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
  0.064
Average production assets, $m
  380,667
  389,422
  399,431
  410,667
  423,117
  436,777
  451,652
  467,754
  485,101
  503,718
  523,635
  544,887
  567,515
  591,563
  617,081
  644,124
  672,749
  703,021
  735,006
  768,778
  804,413
  841,993
  881,605
  923,341
  967,299
  1,013,580
  1,062,295
  1,113,556
  1,167,486
  1,224,210
Working capital, $m
  -315,222
  -322,472
  -330,760
  -340,064
  -350,374
  -361,686
  -374,004
  -387,337
  -401,702
  -417,118
  -433,611
  -451,210
  -469,947
  -489,861
  -510,992
  -533,385
  -557,089
  -582,157
  -608,643
  -636,609
  -666,117
  -697,236
  -730,038
  -764,599
  -801,000
  -839,324
  -879,664
  -922,112
  -966,770
  -1,013,743
Total debt, $m
  194,531
  199,659
  205,520
  212,101
  219,392
  227,393
  236,105
  245,535
  255,695
  266,598
  278,263
  290,710
  303,962
  318,046
  332,991
  348,829
  365,594
  383,323
  402,056
  421,835
  442,706
  464,715
  487,915
  512,358
  538,103
  565,209
  593,739
  623,761
  655,346
  688,568
Total liabilities, $m
  222,945
  228,073
  233,934
  240,515
  247,806
  255,807
  264,519
  273,949
  284,109
  295,012
  306,677
  319,124
  332,376
  346,460
  361,405
  377,243
  394,008
  411,737
  430,470
  450,249
  471,120
  493,129
  516,329
  540,772
  566,517
  593,623
  622,153
  652,175
  683,760
  716,982
Total equity, $m
  24,772
  25,341
  25,993
  26,724
  27,534
  28,423
  29,391
  30,439
  31,568
  32,779
  34,075
  35,458
  36,931
  38,496
  40,156
  41,916
  43,779
  45,749
  47,830
  50,028
  52,347
  54,792
  57,370
  60,086
  62,946
  65,958
  69,128
  72,464
  75,973
  79,665
Total liabilities and equity, $m
  247,717
  253,414
  259,927
  267,239
  275,340
  284,230
  293,910
  304,388
  315,677
  327,791
  340,752
  354,582
  369,307
  384,956
  401,561
  419,159
  437,787
  457,486
  478,300
  500,277
  523,467
  547,921
  573,699
  600,858
  629,463
  659,581
  691,281
  724,639
  759,733
  796,647
Debt-to-equity ratio
  7.850
  7.880
  7.910
  7.940
  7.970
  8.000
  8.030
  8.070
  8.100
  8.130
  8.170
  8.200
  8.230
  8.260
  8.290
  8.320
  8.350
  8.380
  8.410
  8.430
  8.460
  8.480
  8.500
  8.530
  8.550
  8.570
  8.590
  8.610
  8.630
  8.640
Adjusted equity ratio
  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
  -6,847
  -5,405
  -5,499
  -5,611
  -5,738
  -5,882
  -6,043
  -6,219
  -6,411
  -6,619
  -4,826
  -5,067
  -5,326
  -5,602
  -5,896
  -6,209
  -6,541
  -6,893
  -7,265
  -7,660
  -8,077
  -8,517
  -8,981
  -9,471
  -9,988
  -10,532
  -11,105
  -11,709
  -12,344
  -13,013
Depreciation, amort., depletion, $m
  40,085
  40,961
  41,961
  43,085
  44,330
  45,696
  47,184
  48,794
  50,529
  52,390
  52,364
  54,489
  56,751
  59,156
  61,708
  64,412
  67,275
  70,302
  73,501
  76,878
  80,441
  84,199
  88,160
  92,334
  96,730
  101,358
  106,229
  111,356
  116,749
  122,421
Funds from operations, $m
  33,238
  35,555
  36,462
  37,474
  38,592
  39,814
  41,141
  42,575
  44,118
  45,771
  47,538
  49,422
  51,426
  53,555
  55,812
  58,204
  60,734
  63,409
  66,235
  69,218
  72,365
  75,683
  79,179
  82,863
  86,742
  90,826
  95,124
  99,647
  104,404
  109,408
Change in working capital, $m
  -6,181
  -7,250
  -8,288
  -9,304
  -10,310
  -11,312
  -12,318
  -13,334
  -14,365
  -15,416
  -16,493
  -17,598
  -18,737
  -19,914
  -21,131
  -22,393
  -23,704
  -25,067
  -26,486
  -27,966
  -29,509
  -31,119
  -32,802
  -34,561
  -36,400
  -38,325
  -40,339
  -42,449
  -44,658
  -46,972
Cash from operations, $m
  39,419
  42,805
  44,750
  46,779
  48,901
  51,126
  53,459
  55,909
  58,482
  61,187
  64,031
  67,020
  70,163
  73,468
  76,943
  80,597
  84,438
  88,477
  92,722
  97,184
  101,873
  106,802
  111,981
  117,424
  123,143
  129,151
  135,464
  142,095
  149,062
  156,380
Maintenance CAPEX, $m
  -37,320
  -38,067
  -38,942
  -39,943
  -41,067
  -42,312
  -43,678
  -45,165
  -46,775
  -48,510
  -50,372
  -52,364
  -54,489
  -56,751
  -59,156
  -61,708
  -64,412
  -67,275
  -70,302
  -73,501
  -76,878
  -80,441
  -84,199
  -88,160
  -92,334
  -96,730
  -101,358
  -106,229
  -111,356
  -116,749
New CAPEX, $m
  -7,468
  -8,755
  -10,008
  -11,236
  -12,450
  -13,660
  -14,875
  -16,102
  -17,347
  -18,617
  -19,917
  -21,252
  -22,628
  -24,048
  -25,518
  -27,043
  -28,625
  -30,272
  -31,985
  -33,772
  -35,635
  -37,580
  -39,612
  -41,736
  -43,958
  -46,282
  -48,714
  -51,262
  -53,929
  -56,725
Cash from investing activities, $m
  -44,788
  -46,822
  -48,950
  -51,179
  -53,517
  -55,972
  -58,553
  -61,267
  -64,122
  -67,127
  -70,289
  -73,616
  -77,117
  -80,799
  -84,674
  -88,751
  -93,037
  -97,547
  -102,287
  -107,273
  -112,513
  -118,021
  -123,811
  -129,896
  -136,292
  -143,012
  -150,072
  -157,491
  -165,285
  -173,474
Free cash flow, $m
  -5,369
  -4,017
  -4,201
  -4,400
  -4,615
  -4,847
  -5,094
  -5,358
  -5,640
  -5,940
  -6,258
  -6,596
  -6,953
  -7,331
  -7,731
  -8,154
  -8,599
  -9,070
  -9,566
  -10,089
  -10,639
  -11,219
  -11,830
  -12,473
  -13,149
  -13,861
  -14,609
  -15,396
  -16,223
  -17,093
Issuance/(repayment) of debt, $m
  -23,734
  5,128
  5,861
  6,581
  7,292
  8,001
  8,712
  9,430
  10,160
  10,903
  11,665
  12,447
  13,252
  14,084
  14,945
  15,838
  16,765
  17,729
  18,733
  19,779
  20,870
  22,010
  23,200
  24,444
  25,745
  27,106
  28,530
  30,022
  31,585
  33,222
Issuance/(repurchase) of shares, $m
  33,976
  5,975
  6,151
  6,342
  6,549
  6,771
  7,011
  7,267
  7,540
  7,831
  6,122
  6,450
  6,798
  7,167
  7,556
  7,968
  8,403
  8,863
  9,347
  9,857
  10,395
  10,962
  11,559
  12,187
  12,848
  13,544
  14,275
  15,045
  15,854
  16,705
Cash from financing (excl. dividends), $m  
  10,242
  11,103
  12,012
  12,923
  13,841
  14,772
  15,723
  16,697
  17,700
  18,734
  17,787
  18,897
  20,050
  21,251
  22,501
  23,806
  25,168
  26,592
  28,080
  29,636
  31,265
  32,972
  34,759
  36,631
  38,593
  40,650
  42,805
  45,067
  47,439
  49,927
Total cash flow (excl. dividends), $m
  4,873
  7,086
  7,811
  8,522
  9,225
  9,925
  10,629
  11,339
  12,059
  12,794
  11,528
  12,301
  13,097
  13,920
  14,771
  15,653
  16,569
  17,522
  18,514
  19,548
  20,626
  21,752
  22,928
  24,158
  25,444
  26,789
  28,197
  29,671
  31,216
  32,833
Retained Cash Flow (-), $m
  -33,976
  -5,975
  -6,151
  -6,342
  -6,549
  -6,771
  -7,011
  -7,267
  -7,540
  -7,831
  -6,122
  -6,450
  -6,798
  -7,167
  -7,556
  -7,968
  -8,403
  -8,863
  -9,347
  -9,857
  -10,395
  -10,962
  -11,559
  -12,187
  -12,848
  -13,544
  -14,275
  -15,045
  -15,854
  -16,705
Prev. year cash balance distribution, $m
  2,357
  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
  -26,746
  1,111
  1,661
  2,180
  2,676
  3,154
  3,618
  4,072
  4,520
  4,964
  5,407
  5,851
  6,299
  6,753
  7,214
  7,684
  8,166
  8,659
  9,167
  9,690
  10,231
  10,790
  11,369
  11,971
  12,595
  13,245
  13,922
  14,627
  15,362
  16,129
Discount rate, %
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.71
  24.89
  26.14
  27.44
  28.81
  30.25
  31.77
  33.36
  35.02
  36.77
  38.61
  40.54
  42.57
  44.70
  46.93
  49.28
  51.75
  54.33
PV of cash for distribution, $m
  -23,627
  857
  1,105
  1,234
  1,272
  1,239
  1,157
  1,042
  909
  770
  635
  509
  396
  301
  222
  159
  110
  74
  49
  31
  19
  11
  6
  3
  2
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  40.3
  32.4
  26.1
  20.9
  16.8
  13.5
  10.8
  8.7
  6.9
  5.8
  4.9
  4.1
  3.5
  2.9
  2.4
  2.0
  1.7
  1.4
  1.1
  1.0
  0.8
  0.6
  0.5
  0.4
  0.4
  0.3
  0.2
  0.2
  0.2

The Bank of New York Mellon Corporation is an investments company. The Company operates businesses through two segments: Investment Management and Investment Services. The Company also has an Other segment, which includes the leasing portfolio, corporate treasury activities (including its investment securities portfolio), derivatives and other trading, corporate and bank-owned life insurance and renewable energy investments, and business exits. As of December 31, 2016, the Company had $29.9 trillion in assets under custody and/or administration and $1.6 trillion in assets under management. The Company's Investment Management boutiques offer a range of actively managed equity, fixed income, alternative and liability-driven investments, along with passive products and cash management. The Company offers asset servicing, clearing services, issuer services and treasury services to its clients.

FINANCIAL RATIOS  of  Bank of New York Mellon (BK)

Valuation Ratios
P/E Ratio 15.1
Price to Sales 0
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 8.5
Price to Free Cash Flow 9.8
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 37.3%
Cap. Spend. - 3 Yr. Gr. Rate 6.3%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 90.7%
Total Debt to Equity 90.7%
Interest Coverage 13
Management Effectiveness
Return On Assets 1.1%
Ret/ On Assets - 3 Yr. Avg. 0.9%
Return On Total Capital 4.8%
Ret/ On T. Cap. - 3 Yr. Avg. 4.3%
Return On Equity 9.2%
Return On Equity - 3 Yr. Avg. 8.2%
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 24.9%
Eff/ Tax Rate - 3 Yr. Avg. 24.8%
Payout Ratio 25.4%

BK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BK stock intrinsic value calculation we used $15543 million for the last fiscal year's total revenue generated by Bank of New York Mellon. The default revenue input number comes from 2017 income statement of Bank of New York Mellon. 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 BK 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 13.2%, whose default value for BK is calculated based on our internal credit rating of Bank of New York Mellon, 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 Bank of New York Mellon.
    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 BK stock the variable cost ratio is equal to 69.1%.

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 BK 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 Bank of New York Mellon.

Corporate tax rate of 27% is the nominal tax rate for Bank of New York Mellon. 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 BK 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 BK are equal to 2401.1%.

Life of production assets of 10 years is the average useful life of capital assets used in Bank of New York Mellon 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 BK is equal to -1988.3%. 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 - $0 million for Bank of New York Mellon - 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 1034 million for Bank of New York Mellon 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 Bank of New York Mellon at the current share price and the inputted number of shares is $52.7 billion.

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COMPANY NEWS

▶ Warren Buffet's Berkshire Portfolio is Now 24% Apple: 13F   [Aug-15-18 01:38PM  Investopedia]
▶ Bitcoin Falls Below $8,000 as Bull Market Slows   [Jul-31-18 11:29AM  Investing.com]
▶ Tulane University Selects BNY Mellon for Asset Servicing   [Jul-30-18 10:00AM  PR Newswire]
▶ /C O R R E C T I O N -- BNY Mellon/   [Jul-26-18 05:11PM  PR Newswire]
▶ [$$] Bank of New York Mellon Results Get Chilly Reception   [Jul-19-18 08:28PM  The Wall Street Journal]
▶ BNY Mellon Declares Dividends   [06:30AM  PR Newswire]
▶ Wells Fargo's Harvey Sees Banks as Buying Opportunity   [Jul-02-18 10:58AM  Bloomberg Video]
▶ BNY Mellon Launches FX Options   [Jun-26-18 08:30AM  PR Newswire]
▶ Alcentra Expands U.S. Direct Lending Team   [08:00AM  PR Newswire]
▶ Meet the next chairman of BNY Mellon PA   [Jun-22-18 01:01PM  American City Business Journals]
▶ 13F: Buffett Increased Apple, Monsanto & Teva   [May-18-18 06:00AM  Investopedia]
▶ [$$] FT Engage: events for readers   [May-02-18 11:27PM  Financial Times]
▶ The Case for a Weaker U.S. Dollar   [Apr-24-18 07:11AM  Bloomberg Video]
▶ BNY Mellon profit rises 29 pct   [06:35AM  Reuters]
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