Intrinsic value of BT Group plc - BT

Previous Close

$15.28

  Intrinsic Value

$21.69

stock screener

  Rating & Target

buy

+42%

Previous close

$15.28

 
Intrinsic value

$21.69

 
Up/down potential

+42%

 
Rating

buy

We calculate the intrinsic value of BT 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 0001), $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 30.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  10.10
  9.59
  9.13
  8.72
  8.35
  8.01
  7.71
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
Revenue, $m
  36,428
  39,921
  43,566
  47,364
  51,317
  55,429
  59,702
  64,144
  68,759
  73,556
  78,542
  83,726
  89,118
  94,729
  100,571
  106,656
  112,996
  119,607
  126,503
  133,700
  141,214
  149,062
  157,264
  165,838
  174,805
  184,185
  194,001
  204,277
  215,036
  226,304
Variable operating expenses, $m
  27,113
  29,517
  32,024
  34,637
  37,357
  40,185
  43,125
  46,181
  49,356
  52,656
  54,033
  57,599
  61,309
  65,169
  69,188
  73,374
  77,736
  82,284
  87,028
  91,979
  97,148
  102,548
  108,190
  114,089
  120,257
  126,711
  133,464
  140,533
  147,934
  155,686
Fixed operating expenses, $m
  3,711
  3,793
  3,876
  3,961
  4,048
  4,137
  4,228
  4,321
  4,417
  4,514
  4,613
  4,715
  4,818
  4,924
  5,033
  5,143
  5,256
  5,372
  5,490
  5,611
  5,734
  5,861
  5,990
  6,121
  6,256
  6,394
  6,534
  6,678
  6,825
  6,975
Total operating expenses, $m
  30,824
  33,310
  35,900
  38,598
  41,405
  44,322
  47,353
  50,502
  53,773
  57,170
  58,646
  62,314
  66,127
  70,093
  74,221
  78,517
  82,992
  87,656
  92,518
  97,590
  102,882
  108,409
  114,180
  120,210
  126,513
  133,105
  139,998
  147,211
  154,759
  162,661
Operating income, $m
  5,603
  6,612
  7,666
  8,766
  9,912
  11,106
  12,349
  13,642
  14,987
  16,386
  19,896
  21,412
  22,991
  24,636
  26,350
  28,138
  30,004
  31,951
  33,985
  36,110
  38,331
  40,654
  43,084
  45,628
  48,291
  51,081
  54,003
  57,066
  60,276
  63,642
EBITDA, $m
  11,761
  13,163
  14,628
  16,155
  17,747
  19,404
  21,128
  22,922
  24,787
  26,727
  28,745
  30,846
  33,032
  35,309
  37,682
  40,156
  42,736
  45,428
  48,238
  51,174
  54,242
  57,449
  60,804
  64,314
  67,987
  71,834
  75,862
  80,083
  84,505
  89,141
Interest expense (income), $m
  765
  1,195
  1,181
  1,168
  1,153
  1,138
  1,123
  1,106
  1,089
  1,072
  1,054
  1,035
  1,015
  995
  973
  951
  928
  904
  879
  853
  826
  797
  768
  737
  704
  670
  635
  598
  559
  519
  476
Earnings before tax, $m
  4,409
  5,430
  6,498
  7,613
  8,774
  9,983
  11,242
  12,552
  13,915
  15,333
  18,861
  20,397
  21,996
  23,662
  25,399
  27,210
  29,100
  31,072
  33,132
  35,284
  37,534
  39,886
  42,348
  44,924
  47,621
  50,446
  53,405
  56,507
  59,758
  63,166
Tax expense, $m
  1,190
  1,466
  1,755
  2,055
  2,369
  2,696
  3,035
  3,389
  3,757
  4,140
  5,092
  5,507
  5,939
  6,389
  6,858
  7,347
  7,857
  8,389
  8,946
  9,527
  10,134
  10,769
  11,434
  12,129
  12,858
  13,620
  14,419
  15,257
  16,135
  17,055
Net income, $m
  3,218
  3,964
  4,744
  5,557
  6,405
  7,288
  8,207
  9,163
  10,158
  11,193
  13,768
  14,890
  16,057
  17,274
  18,541
  19,863
  21,243
  22,683
  24,186
  25,757
  27,400
  29,117
  30,914
  32,794
  34,763
  36,825
  38,986
  41,250
  43,623
  46,111

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
  12,822
  14,052
  15,335
  16,672
  18,063
  19,510
  21,015
  22,578
  24,203
  25,891
  27,646
  29,471
  31,369
  33,344
  35,400
  37,542
  39,773
  42,100
  44,528
  47,061
  49,706
  52,468
  55,355
  58,373
  61,529
  64,831
  68,286
  71,903
  75,690
  79,656
Adjusted assets (=assets-cash), $m
  12,822
  14,052
  15,335
  16,672
  18,063
  19,510
  21,015
  22,578
  24,203
  25,891
  27,646
  29,471
  31,369
  33,344
  35,400
  37,542
  39,773
  42,100
  44,528
  47,061
  49,706
  52,468
  55,355
  58,373
  61,529
  64,831
  68,286
  71,903
  75,690
  79,656
Revenue / Adjusted assets
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
  2.841
Average production assets, $m
  35,298
  38,684
  42,216
  45,896
  49,727
  53,710
  57,852
  62,155
  66,628
  71,276
  76,107
  81,130
  86,355
  91,793
  97,453
  103,349
  109,493
  115,899
  122,581
  129,555
  136,836
  144,441
  152,389
  160,697
  169,386
  178,475
  187,987
  197,944
  208,370
  219,289
Working capital, $m
  -5,974
  -6,547
  -7,145
  -7,768
  -8,416
  -9,090
  -9,791
  -10,520
  -11,277
  -12,063
  -12,881
  -13,731
  -14,615
  -15,536
  -16,494
  -17,492
  -18,531
  -19,616
  -20,747
  -21,927
  -23,159
  -24,446
  -25,791
  -27,197
  -28,668
  -30,206
  -31,816
  -33,501
  -35,266
  -37,114
Total debt, $m
  19,690
  19,460
  19,220
  18,970
  18,710
  18,439
  18,158
  17,866
  17,562
  17,246
  16,918
  16,577
  16,222
  15,853
  15,468
  15,068
  14,650
  14,215
  13,761
  13,287
  12,793
  12,276
  11,736
  11,172
  10,582
  9,964
  9,318
  8,642
  7,934
  7,192
Total liabilities, $m
  -2,398
  -2,628
  -2,868
  -3,118
  -3,378
  -3,648
  -3,930
  -4,222
  -4,526
  -4,842
  -5,170
  -5,511
  -5,866
  -6,235
  -6,620
  -7,020
  -7,438
  -7,873
  -8,327
  -8,800
  -9,295
  -9,812
  -10,351
  -10,916
  -11,506
  -12,123
  -12,770
  -13,446
  -14,154
  -14,896
Total equity, $m
  15,220
  16,679
  18,202
  19,789
  21,441
  23,159
  24,944
  26,800
  28,728
  30,732
  32,816
  34,982
  37,234
  39,579
  42,020
  44,562
  47,211
  49,973
  52,854
  55,861
  59,001
  62,280
  65,707
  69,289
  73,035
  76,954
  81,056
  85,349
  89,844
  94,552
Total liabilities and equity, $m
  12,822
  14,051
  15,334
  16,671
  18,063
  19,511
  21,014
  22,578
  24,202
  25,890
  27,646
  29,471
  31,368
  33,344
  35,400
  37,542
  39,773
  42,100
  44,527
  47,061
  49,706
  52,468
  55,356
  58,373
  61,529
  64,831
  68,286
  71,903
  75,690
  79,656
Debt-to-equity ratio
  1.290
  1.170
  1.060
  0.960
  0.870
  0.800
  0.730
  0.670
  0.610
  0.560
  0.520
  0.470
  0.440
  0.400
  0.370
  0.340
  0.310
  0.280
  0.260
  0.240
  0.220
  0.200
  0.180
  0.160
  0.140
  0.130
  0.110
  0.100
  0.090
  0.080
Adjusted equity ratio
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,218
  3,964
  4,744
  5,557
  6,405
  7,288
  8,207
  9,163
  10,158
  11,193
  13,768
  14,890
  16,057
  17,274
  18,541
  19,863
  21,243
  22,683
  24,186
  25,757
  27,400
  29,117
  30,914
  32,794
  34,763
  36,825
  38,986
  41,250
  43,623
  46,111
Depreciation, amort., depletion, $m
  6,157
  6,551
  6,962
  7,390
  7,835
  8,298
  8,780
  9,280
  9,800
  10,341
  8,850
  9,434
  10,041
  10,674
  11,332
  12,017
  12,732
  13,477
  14,254
  15,065
  15,911
  16,796
  17,720
  18,686
  19,696
  20,753
  21,859
  23,017
  24,229
  25,499
Funds from operations, $m
  9,376
  10,515
  11,705
  12,947
  14,240
  15,586
  16,987
  18,443
  19,958
  21,534
  22,618
  24,323
  26,099
  27,947
  29,873
  31,881
  33,975
  36,159
  38,440
  40,822
  43,311
  45,913
  48,633
  51,480
  54,459
  57,578
  60,845
  64,267
  67,852
  71,610
Change in working capital, $m
  -548
  -573
  -598
  -623
  -648
  -674
  -701
  -728
  -757
  -787
  -818
  -850
  -884
  -920
  -958
  -998
  -1,040
  -1,084
  -1,131
  -1,180
  -1,232
  -1,287
  -1,345
  -1,406
  -1,471
  -1,538
  -1,610
  -1,685
  -1,764
  -1,848
Cash from operations, $m
  9,924
  11,088
  12,303
  13,570
  14,888
  16,260
  17,688
  19,172
  20,715
  22,320
  23,436
  25,174
  26,983
  28,867
  30,831
  32,879
  35,014
  37,243
  39,571
  42,002
  44,543
  47,200
  49,979
  52,886
  55,930
  59,117
  62,455
  65,952
  69,617
  73,458
Maintenance CAPEX, $m
  -3,728
  -4,104
  -4,498
  -4,909
  -5,337
  -5,782
  -6,245
  -6,727
  -7,227
  -7,747
  -8,288
  -8,850
  -9,434
  -10,041
  -10,674
  -11,332
  -12,017
  -12,732
  -13,477
  -14,254
  -15,065
  -15,911
  -16,796
  -17,720
  -18,686
  -19,696
  -20,753
  -21,859
  -23,017
  -24,229
New CAPEX, $m
  -3,240
  -3,385
  -3,532
  -3,680
  -3,831
  -3,984
  -4,141
  -4,304
  -4,472
  -4,648
  -4,831
  -5,023
  -5,225
  -5,437
  -5,661
  -5,896
  -6,144
  -6,406
  -6,682
  -6,974
  -7,281
  -7,605
  -7,948
  -8,308
  -8,689
  -9,089
  -9,512
  -9,957
  -10,426
  -10,919
Cash from investing activities, $m
  -6,968
  -7,489
  -8,030
  -8,589
  -9,168
  -9,766
  -10,386
  -11,031
  -11,699
  -12,395
  -13,119
  -13,873
  -14,659
  -15,478
  -16,335
  -17,228
  -18,161
  -19,138
  -20,159
  -21,228
  -22,346
  -23,516
  -24,744
  -26,028
  -27,375
  -28,785
  -30,265
  -31,816
  -33,443
  -35,148
Free cash flow, $m
  2,956
  3,599
  4,273
  4,981
  5,721
  6,494
  7,301
  8,141
  9,015
  9,925
  10,317
  11,301
  12,324
  13,389
  14,497
  15,651
  16,853
  18,106
  19,412
  20,775
  22,197
  23,683
  25,236
  26,858
  28,556
  30,331
  32,190
  34,136
  36,174
  38,310
Issuance/(repayment) of debt, $m
  -219
  -230
  -240
  -250
  -260
  -271
  -281
  -292
  -304
  -316
  -328
  -341
  -355
  -369
  -385
  -400
  -417
  -435
  -454
  -474
  -495
  -517
  -540
  -564
  -590
  -617
  -646
  -676
  -708
  -742
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  -219
  -230
  -240
  -250
  -260
  -271
  -281
  -292
  -304
  -316
  -328
  -341
  -355
  -369
  -385
  -400
  -417
  -435
  -454
  -474
  -495
  -517
  -540
  -564
  -590
  -617
  -646
  -676
  -708
  -742
Total cash flow (excl. dividends), $m
  2,737
  3,369
  4,033
  4,731
  5,461
  6,224
  7,020
  7,849
  8,712
  9,609
  9,988
  10,959
  11,969
  13,019
  14,113
  15,250
  16,436
  17,671
  18,958
  20,301
  21,703
  23,167
  24,696
  26,294
  27,965
  29,714
  31,544
  33,460
  35,466
  37,568
Retained Cash Flow (-), $m
  -1,397
  -1,460
  -1,523
  -1,587
  -1,652
  -1,718
  -1,786
  -1,856
  -1,928
  -2,004
  -2,083
  -2,166
  -2,253
  -2,344
  -2,441
  -2,542
  -2,649
  -2,762
  -2,881
  -3,007
  -3,139
  -3,279
  -3,427
  -3,582
  -3,746
  -3,919
  -4,101
  -4,293
  -4,495
  -4,708
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
  1,340
  1,909
  2,510
  3,144
  3,809
  4,506
  5,234
  5,993
  6,783
  7,605
  7,905
  8,793
  9,716
  10,675
  11,672
  12,708
  13,786
  14,908
  16,077
  17,294
  18,563
  19,887
  21,269
  22,712
  24,219
  25,795
  27,443
  29,167
  30,971
  32,860
Discount rate, %
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.12
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.82
  25.01
  26.26
  27.58
PV of cash for distribution, $m
  1,256
  1,666
  2,027
  2,332
  2,575
  2,754
  2,867
  2,915
  2,901
  2,829
  2,530
  2,392
  2,218
  2,018
  1,802
  1,577
  1,354
  1,139
  939
  757
  598
  461
  347
  255
  182
  127
  86
  56
  36
  22
Current shareholders' claim on cash, %
  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

BT Group plc is a communications services company. The Company is engaged in selling fixed-voice services, broadband, mobile and television products and services, as well as managed networked information technology (IT) solutions and cyber security protection. Its segments include Consumer, which provides fixed-voice, broadband, TV and mobile services; EE, which is a mobile network operator in the United Kingdom and provides mobile and fixed communications services to consumers; Business and Public Sector, which provides communications and IT services to businesses and the public sector in the United Kingdom and the Republic of Ireland (RoI) ;Global Services, which provides managed networked IT services to corporate customers; Wholesale and Ventures, which provides fixed and mobile services to communications providers (CPs); and Openreach, which provides copper and fiber connections between its exchanges and homes and businesses.

FINANCIAL RATIOS  of  BT Group plc (BT)

Valuation Ratios
P/E Ratio 65.6
Price to Sales 5.2
Price to Book 15
Price to Tangible Book
Price to Cash Flow 20.3
Price to Free Cash Flow 41.3
Growth Rates
Sales Growth Rate 27.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 27.5%
Cap. Spend. - 3 Yr. Gr. Rate 5.9%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 120.9%
Total Debt to Equity 152.5%
Interest Coverage 5
Management Effectiveness
Return On Assets 5.7%
Ret/ On Assets - 3 Yr. Avg. 8%
Return On Total Capital 8.3%
Ret/ On T. Cap. - 3 Yr. Avg. 14.6%
Return On Equity 20.7%
Return On Equity - 3 Yr. Avg. 682.5%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 76.9%
Gross Margin - 3 Yr. Avg. 77%
EBITDA Margin 27.2%
EBITDA Margin - 3 Yr. Avg. 30.6%
Operating Margin 12.3%
Oper. Margin - 3 Yr. Avg. 16%
Pre-Tax Margin 9.8%
Pre-Tax Margin - 3 Yr. Avg. 13.3%
Net Profit Margin 7.9%
Net Profit Margin - 3 Yr. Avg. 11%
Effective Tax Rate 18.9%
Eff/ Tax Rate - 3 Yr. Avg. 17.8%
Payout Ratio 75.2%

BT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BT stock intrinsic value calculation we used $33086 million for the last fiscal year's total revenue generated by BT Group plc. The default revenue input number comes from 0001 income statement of BT Group plc. 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 BT stock valuation model: a) initial revenue growth rate of 10.1% 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 6.7%, whose default value for BT is calculated based on our internal credit rating of BT Group plc, 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 BT Group plc.
    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 BT stock the variable cost ratio is equal to 75%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3631 million in the base year in the intrinsic value calculation for BT 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 6% for BT Group plc.

Corporate tax rate of 27% is the nominal tax rate for BT Group plc. 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 BT 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 BT are equal to 96.9%.

Life of production assets of 8.6 years is the average useful life of capital assets used in BT Group plc 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 BT is equal to -16.4%. 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 - $13822.8730823 million for BT Group plc - 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 1984.252 million for BT Group plc 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 BT Group plc at the current share price and the inputted number of shares is $30.3 billion.

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