Intrinsic value of Fiat Chrysler Automobiles - FCAU

Previous Close

$15.77

  Intrinsic Value

$164.65

stock screener

  Rating & Target

str. buy

+944%

Previous close

$15.77

 
Intrinsic value

$164.65

 
Up/down potential

+944%

 
Rating

str. buy

We calculate the intrinsic value of FCAU 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 30.5

 

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, %
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
Revenue, $m
  151,818
  171,707
  192,809
  215,100
  238,556
  263,162
  288,907
  315,789
  343,813
  372,991
  403,346
  434,905
  467,705
  501,790
  537,211
  574,026
  612,300
  652,105
  693,520
  736,627
  781,519
  828,291
  877,046
  927,895
  980,951
  1,036,336
  1,094,179
  1,154,615
  1,217,784
  1,283,835
Variable operating expenses, $m
  128,475
  144,913
  162,355
  180,779
  200,166
  220,503
  241,782
  264,001
  287,163
  311,280
  333,376
  359,460
  386,570
  414,742
  444,018
  474,447
  506,082
  538,982
  573,212
  608,841
  645,945
  684,604
  724,901
  766,929
  810,781
  856,558
  904,367
  954,319
  1,006,529
  1,061,123
Fixed operating expenses, $m
  13,116
  13,405
  13,700
  14,001
  14,309
  14,624
  14,946
  15,275
  15,611
  15,954
  16,305
  16,664
  17,030
  17,405
  17,788
  18,179
  18,579
  18,988
  19,406
  19,833
  20,269
  20,715
  21,171
  21,636
  22,112
  22,599
  23,096
  23,604
  24,123
  24,654
Total operating expenses, $m
  141,591
  158,318
  176,055
  194,780
  214,475
  235,127
  256,728
  279,276
  302,774
  327,234
  349,681
  376,124
  403,600
  432,147
  461,806
  492,626
  524,661
  557,970
  592,618
  628,674
  666,214
  705,319
  746,072
  788,565
  832,893
  879,157
  927,463
  977,923
  1,030,652
  1,085,777
Operating income, $m
  10,227
  13,389
  16,755
  20,320
  24,081
  28,035
  32,179
  36,514
  41,039
  45,757
  53,665
  58,781
  64,104
  69,643
  75,404
  81,399
  87,639
  94,136
  100,902
  107,953
  115,305
  122,972
  130,974
  139,330
  148,057
  157,179
  166,716
  176,692
  187,131
  198,058
EBITDA, $m
  20,341
  24,435
  28,790
  33,401
  38,262
  43,370
  48,722
  54,317
  60,157
  66,244
  72,582
  79,178
  86,040
  93,177
  100,599
  108,321
  116,356
  124,719
  133,428
  142,501
  151,958
  161,819
  172,108
  182,848
  194,064
  205,783
  218,033
  230,843
  244,245
  258,270
Interest expense (income), $m
  0
  1,609
  2,096
  3,245
  4,465
  5,754
  7,110
  8,533
  10,021
  11,575
  13,195
  14,882
  16,637
  18,461
  20,358
  22,328
  24,376
  26,504
  28,717
  31,018
  33,413
  35,905
  38,500
  41,204
  44,023
  46,962
  50,030
  53,232
  56,576
  60,070
  63,722
Earnings before tax, $m
  8,618
  11,293
  13,509
  15,855
  18,327
  20,925
  23,647
  26,493
  29,464
  32,562
  38,783
  42,144
  45,643
  49,285
  53,076
  57,023
  61,135
  65,418
  69,884
  74,541
  79,400
  84,472
  89,770
  95,307
  101,095
  107,149
  113,484
  120,116
  127,061
  134,337
Tax expense, $m
  2,327
  3,049
  3,648
  4,281
  4,948
  5,650
  6,385
  7,153
  7,955
  8,792
  10,471
  11,379
  12,324
  13,307
  14,331
  15,396
  16,506
  17,663
  18,869
  20,126
  21,438
  22,808
  24,238
  25,733
  27,296
  28,930
  30,641
  32,431
  34,307
  36,271
Net income, $m
  6,291
  8,244
  9,862
  11,574
  13,379
  15,275
  17,262
  19,340
  21,509
  23,770
  28,312
  30,765
  33,319
  35,978
  38,746
  41,627
  44,628
  47,756
  51,015
  54,415
  57,962
  61,665
  65,532
  69,574
  73,799
  78,219
  82,844
  87,685
  92,755
  98,066

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
  131,787
  149,051
  167,369
  186,719
  207,080
  228,439
  250,787
  274,122
  298,449
  323,777
  350,127
  377,522
  405,994
  435,581
  466,329
  498,286
  531,511
  566,064
  602,014
  639,433
  678,402
  719,002
  761,325
  805,464
  851,520
  899,597
  949,808
  1,002,270
  1,057,104
  1,114,440
Adjusted assets (=assets-cash), $m
  131,787
  149,051
  167,369
  186,719
  207,080
  228,439
  250,787
  274,122
  298,449
  323,777
  350,127
  377,522
  405,994
  435,581
  466,329
  498,286
  531,511
  566,064
  602,014
  639,433
  678,402
  719,002
  761,325
  805,464
  851,520
  899,597
  949,808
  1,002,270
  1,057,104
  1,114,440
Revenue / Adjusted assets
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
  1.152
Average production assets, $m
  71,203
  80,530
  90,428
  100,882
  111,883
  123,423
  135,497
  148,105
  161,248
  174,933
  189,169
  203,970
  219,354
  235,339
  251,952
  269,218
  287,169
  305,837
  325,261
  345,478
  366,532
  388,468
  411,335
  435,183
  460,066
  486,042
  513,170
  541,514
  571,141
  602,119
Working capital, $m
  -12,297
  -13,908
  -15,618
  -17,423
  -19,323
  -21,316
  -23,401
  -25,579
  -27,849
  -30,212
  -32,671
  -35,227
  -37,884
  -40,645
  -43,514
  -46,496
  -49,596
  -52,821
  -56,175
  -59,667
  -63,303
  -67,092
  -71,041
  -75,159
  -79,457
  -83,943
  -88,629
  -93,524
  -98,640
  -103,991
Total debt, $m
  28,318
  43,855
  60,342
  77,757
  96,082
  115,305
  135,418
  156,420
  178,313
  201,109
  224,824
  249,479
  275,104
  301,733
  329,405
  358,167
  388,069
  419,167
  451,522
  485,200
  520,271
  556,812
  594,902
  634,627
  676,077
  719,347
  764,537
  811,752
  861,103
  912,706
Total liabilities, $m
  118,608
  134,146
  150,632
  168,047
  186,372
  205,595
  225,709
  246,710
  268,604
  291,400
  315,114
  339,769
  365,394
  392,023
  419,696
  448,458
  478,359
  509,457
  541,812
  575,490
  610,561
  647,102
  685,192
  724,918
  766,368
  809,638
  854,828
  902,043
  951,394
  1,002,996
Total equity, $m
  13,179
  14,905
  16,737
  18,672
  20,708
  22,844
  25,079
  27,412
  29,845
  32,378
  35,013
  37,752
  40,599
  43,558
  46,633
  49,829
  53,151
  56,606
  60,201
  63,943
  67,840
  71,900
  76,132
  80,546
  85,152
  89,960
  94,981
  100,227
  105,710
  111,444
Total liabilities and equity, $m
  131,787
  149,051
  167,369
  186,719
  207,080
  228,439
  250,788
  274,122
  298,449
  323,778
  350,127
  377,521
  405,993
  435,581
  466,329
  498,287
  531,510
  566,063
  602,013
  639,433
  678,401
  719,002
  761,324
  805,464
  851,520
  899,598
  949,809
  1,002,270
  1,057,104
  1,114,440
Debt-to-equity ratio
  2.150
  2.940
  3.610
  4.160
  4.640
  5.050
  5.400
  5.710
  5.970
  6.210
  6.420
  6.610
  6.780
  6.930
  7.060
  7.190
  7.300
  7.400
  7.500
  7.590
  7.670
  7.740
  7.810
  7.880
  7.940
  8.000
  8.050
  8.100
  8.150
  8.190
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
  6,291
  8,244
  9,862
  11,574
  13,379
  15,275
  17,262
  19,340
  21,509
  23,770
  28,312
  30,765
  33,319
  35,978
  38,746
  41,627
  44,628
  47,756
  51,015
  54,415
  57,962
  61,665
  65,532
  69,574
  73,799
  78,219
  82,844
  87,685
  92,755
  98,066
Depreciation, amort., depletion, $m
  10,113
  11,046
  12,036
  13,081
  14,181
  15,335
  16,543
  17,804
  19,118
  20,486
  18,917
  20,397
  21,935
  23,534
  25,195
  26,922
  28,717
  30,584
  32,526
  34,548
  36,653
  38,847
  41,133
  43,518
  46,007
  48,604
  51,317
  54,151
  57,114
  60,212
Funds from operations, $m
  16,405
  19,290
  21,898
  24,655
  27,560
  30,610
  33,805
  37,143
  40,627
  44,257
  47,229
  51,162
  55,255
  59,512
  63,941
  68,549
  73,345
  78,339
  83,541
  88,963
  94,615
  100,512
  106,666
  113,092
  119,806
  126,823
  134,161
  141,836
  149,869
  158,278
Change in working capital, $m
  -1,510
  -1,611
  -1,709
  -1,806
  -1,900
  -1,993
  -2,085
  -2,177
  -2,270
  -2,363
  -2,459
  -2,556
  -2,657
  -2,761
  -2,869
  -2,982
  -3,100
  -3,224
  -3,355
  -3,492
  -3,636
  -3,789
  -3,949
  -4,119
  -4,298
  -4,486
  -4,685
  -4,895
  -5,117
  -5,350
Cash from operations, $m
  17,915
  20,901
  23,607
  26,461
  29,460
  32,603
  35,890
  39,321
  42,896
  46,620
  49,687
  53,719
  57,912
  62,273
  66,810
  71,531
  76,445
  81,563
  86,896
  92,454
  98,251
  104,300
  110,615
  117,211
  124,104
  131,309
  138,846
  146,732
  154,985
  163,628
Maintenance CAPEX, $m
  -6,242
  -7,120
  -8,053
  -9,043
  -10,088
  -11,188
  -12,342
  -13,550
  -14,811
  -16,125
  -17,493
  -18,917
  -20,397
  -21,935
  -23,534
  -25,195
  -26,922
  -28,717
  -30,584
  -32,526
  -34,548
  -36,653
  -38,847
  -41,133
  -43,518
  -46,007
  -48,604
  -51,317
  -54,151
  -57,114
New CAPEX, $m
  -8,783
  -9,328
  -9,897
  -10,454
  -11,001
  -11,540
  -12,074
  -12,608
  -13,143
  -13,685
  -14,236
  -14,801
  -15,383
  -15,986
  -16,612
  -17,266
  -17,951
  -18,669
  -19,423
  -20,217
  -21,054
  -21,936
  -22,866
  -23,848
  -24,883
  -25,976
  -27,128
  -28,344
  -29,626
  -30,978
Cash from investing activities, $m
  -15,025
  -16,448
  -17,950
  -19,497
  -21,089
  -22,728
  -24,416
  -26,158
  -27,954
  -29,810
  -31,729
  -33,718
  -35,780
  -37,921
  -40,146
  -42,461
  -44,873
  -47,386
  -50,007
  -52,743
  -55,602
  -58,589
  -61,713
  -64,981
  -68,401
  -71,983
  -75,732
  -79,661
  -83,777
  -88,092
Free cash flow, $m
  2,890
  4,453
  5,657
  6,964
  8,371
  9,875
  11,473
  13,163
  14,943
  16,811
  17,958
  20,000
  22,131
  24,352
  26,663
  29,069
  31,573
  34,178
  36,889
  39,711
  42,649
  45,711
  48,902
  52,230
  55,702
  59,327
  63,113
  67,070
  71,208
  75,536
Issuance/(repayment) of debt, $m
  6,577
  15,538
  16,487
  17,415
  18,325
  19,223
  20,113
  21,001
  21,894
  22,796
  23,714
  24,655
  25,625
  26,629
  27,673
  28,762
  29,902
  31,098
  32,355
  33,678
  35,071
  36,541
  38,090
  39,725
  41,450
  43,270
  45,190
  47,215
  49,351
  51,603
Issuance/(repurchase) of shares, $m
  3,313
  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  
  9,890
  15,538
  16,487
  17,415
  18,325
  19,223
  20,113
  21,001
  21,894
  22,796
  23,714
  24,655
  25,625
  26,629
  27,673
  28,762
  29,902
  31,098
  32,355
  33,678
  35,071
  36,541
  38,090
  39,725
  41,450
  43,270
  45,190
  47,215
  49,351
  51,603
Total cash flow (excl. dividends), $m
  12,780
  19,991
  22,143
  24,378
  26,696
  29,098
  31,587
  34,165
  36,836
  39,606
  41,672
  44,656
  47,756
  50,980
  54,336
  57,831
  61,475
  65,276
  69,244
  73,389
  77,721
  82,252
  86,992
  91,955
  97,152
  102,597
  108,303
  114,285
  120,559
  127,138
Retained Cash Flow (-), $m
  -9,605
  -1,726
  -1,832
  -1,935
  -2,036
  -2,136
  -2,235
  -2,333
  -2,433
  -2,533
  -2,635
  -2,739
  -2,847
  -2,959
  -3,075
  -3,196
  -3,322
  -3,455
  -3,595
  -3,742
  -3,897
  -4,060
  -4,232
  -4,414
  -4,606
  -4,808
  -5,021
  -5,246
  -5,483
  -5,734
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
  3,176
  18,264
  20,311
  22,443
  24,660
  26,962
  29,352
  31,831
  34,404
  37,074
  39,037
  41,916
  44,909
  48,022
  51,261
  54,636
  58,152
  61,820
  65,649
  69,647
  73,824
  78,191
  82,760
  87,541
  92,546
  97,789
  103,282
  109,039
  115,075
  121,405
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
  3,045
  16,721
  17,676
  18,480
  19,115
  19,568
  19,830
  19,895
  19,763
  19,436
  18,538
  17,887
  17,075
  16,122
  15,049
  13,884
  12,653
  11,385
  10,108
  8,850
  7,636
  6,488
  5,424
  4,459
  3,600
  2,853
  2,217
  1,687
  1,256
  914
Current shareholders' claim on cash, %
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2
  90.2

Fiat Chrysler Automobiles N.V., together with its subsidiaries, designs, engineers, manufactures, distributes, and sells vehicles, components, and production systems. The company operates through six segments: NAFTA, LATAM, APAC, EMEA, Maserati, and Components. It provides passenger cars, light trucks, and light commercial vehicles under the Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia, and Ram brand names; and luxury vehicles under the Maserati brand, as well as after-sales services and parts under the Mopar brand. The company also produces and sells lighting components, body control units, suspensions, shock absorbers, electronic systems, exhaust systems, powertrain components, engine control units, plastic molding components, and after-market under the Magneti Marelli brand name. In addition, it offers cast iron components for engines, gearboxes, transmissions and suspension systems, and aluminum cylinder heads under the Teksid brand; and designs and produces industrial automation systems and related products for the automotive industry under the Comau brand name. Further, the company is involved in media and publishing businesses. It sells its products directly, or through distributors and dealers in approximately 150 countries. Fiat Chrysler Automobiles N.V. was founded in 1899 and is based in London, the United Kingdom.

FINANCIAL RATIOS  of  Fiat Chrysler Automobiles (FCAU)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
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 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

FCAU stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FCAU stock intrinsic value calculation we used $133174 million for the last fiscal year's total revenue generated by Fiat Chrysler Automobiles. The default revenue input number comes from 2017 income statement of Fiat Chrysler Automobiles. 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 FCAU stock valuation model: a) initial revenue growth rate of 14% 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 FCAU is calculated based on our internal credit rating of Fiat Chrysler Automobiles, 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 Fiat Chrysler Automobiles.
    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 FCAU stock the variable cost ratio is equal to 84.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $12834 million in the base year in the intrinsic value calculation for FCAU 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 7.4% for Fiat Chrysler Automobiles.

Corporate tax rate of 27% is the nominal tax rate for Fiat Chrysler Automobiles. 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 FCAU 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 FCAU are equal to 46.9%.

Life of production assets of 10 years is the average useful life of capital assets used in Fiat Chrysler Automobiles 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 FCAU is equal to -8.1%. 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 - $3574 million for Fiat Chrysler Automobiles - 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 1937 million for Fiat Chrysler Automobiles 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 Fiat Chrysler Automobiles at the current share price and the inputted number of shares is $30.5 billion.

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