Intrinsic value of News Corporation - NWSA

Previous Close

$12.35

  Intrinsic Value

$200.63

stock screener

  Rating & Target

str. buy

+999%

Previous close

$12.35

 
Intrinsic value

$200.63

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of NWSA 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 7.2

 

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, %
  20.50
  18.95
  17.56
  16.30
  15.17
  14.15
  13.24
  12.41
  11.67
  11.01
  10.40
  9.86
  9.38
  8.94
  8.55
  8.19
  7.87
  7.58
  7.33
  7.09
  6.88
  6.70
  6.53
  6.37
  6.24
  6.11
  6.00
  5.90
  5.81
  5.73
Revenue, $m
  10,874
  12,935
  15,205
  17,684
  20,366
  23,248
  26,326
  29,594
  33,048
  36,685
  40,502
  44,497
  48,670
  53,021
  57,552
  62,266
  67,168
  72,263
  77,557
  83,059
  88,777
  94,721
  100,903
  107,335
  114,028
  120,999
  128,260
  135,829
  143,723
  151,958
Variable operating expenses, $m
  2,144
  2,400
  2,683
  2,992
  3,326
  3,685
  4,069
  4,476
  4,906
  5,359
  5,046
  5,543
  6,063
  6,605
  7,170
  7,757
  8,368
  9,002
  9,662
  10,347
  11,060
  11,800
  12,570
  13,371
  14,205
  15,074
  15,978
  16,921
  17,905
  18,931
Fixed operating expenses, $m
  7,211
  7,370
  7,532
  7,698
  7,867
  8,040
  8,217
  8,398
  8,583
  8,771
  8,964
  9,162
  9,363
  9,569
  9,780
  9,995
  10,215
  10,439
  10,669
  10,904
  11,144
  11,389
  11,639
  11,895
  12,157
  12,425
  12,698
  12,977
  13,263
  13,555
Total operating expenses, $m
  9,355
  9,770
  10,215
  10,690
  11,193
  11,725
  12,286
  12,874
  13,489
  14,130
  14,010
  14,705
  15,426
  16,174
  16,950
  17,752
  18,583
  19,441
  20,331
  21,251
  22,204
  23,189
  24,209
  25,266
  26,362
  27,499
  28,676
  29,898
  31,168
  32,486
Operating income, $m
  1,519
  3,164
  4,990
  6,994
  9,173
  11,523
  14,040
  16,720
  19,560
  22,555
  26,492
  29,792
  33,244
  36,847
  40,603
  44,515
  48,586
  52,821
  57,226
  61,808
  66,574
  71,532
  76,694
  82,068
  87,666
  93,500
  99,584
  105,931
  112,555
  119,473
EBITDA, $m
  2,657
  4,369
  6,267
  8,351
  10,616
  13,059
  15,675
  18,460
  21,410
  24,522
  27,793
  31,222
  34,807
  38,550
  42,452
  46,515
  50,743
  55,142
  59,718
  64,476
  69,426
  74,575
  79,935
  85,516
  91,329
  97,387
  103,704
  110,294
  117,172
  124,355
Interest expense (income), $m
  0
  105
  184
  271
  367
  472
  585
  707
  837
  975
  1,121
  1,275
  1,436
  1,605
  1,781
  1,965
  2,157
  2,356
  2,563
  2,778
  3,002
  3,235
  3,476
  3,727
  3,989
  4,260
  4,543
  4,838
  5,145
  5,465
  5,798
Earnings before tax, $m
  1,414
  2,980
  4,719
  6,627
  8,701
  10,938
  13,333
  15,883
  18,585
  21,434
  25,217
  28,356
  31,639
  35,065
  38,638
  42,358
  46,230
  50,258
  54,448
  58,806
  63,339
  68,056
  72,966
  78,079
  83,405
  88,957
  94,746
  100,786
  107,091
  113,675
Tax expense, $m
  382
  805
  1,274
  1,789
  2,349
  2,953
  3,600
  4,289
  5,018
  5,787
  6,809
  7,656
  8,542
  9,468
  10,432
  11,437
  12,482
  13,570
  14,701
  15,878
  17,102
  18,375
  19,701
  21,081
  22,519
  24,018
  25,581
  27,212
  28,914
  30,692
Net income, $m
  1,032
  2,176
  3,445
  4,838
  6,352
  7,985
  9,733
  11,595
  13,567
  15,647
  18,409
  20,700
  23,096
  25,598
  28,205
  30,921
  33,748
  36,688
  39,747
  42,928
  46,238
  49,681
  53,265
  56,998
  60,886
  64,939
  69,165
  73,574
  78,176
  82,983

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
  19,699
  23,432
  27,546
  32,035
  36,895
  42,117
  47,692
  53,612
  59,870
  66,458
  73,373
  80,611
  88,170
  96,052
  104,261
  112,801
  121,681
  130,911
  140,502
  150,469
  160,828
  171,597
  182,796
  194,447
  206,573
  219,201
  232,356
  246,068
  260,367
  275,286
Adjusted assets (=assets-cash), $m
  19,699
  23,432
  27,546
  32,035
  36,895
  42,117
  47,692
  53,612
  59,870
  66,458
  73,373
  80,611
  88,170
  96,052
  104,261
  112,801
  121,681
  130,911
  140,502
  150,469
  160,828
  171,597
  182,796
  194,447
  206,573
  219,201
  232,356
  246,068
  260,367
  275,286
Revenue / Adjusted assets
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
Average production assets, $m
  6,742
  8,019
  9,427
  10,964
  12,627
  14,414
  16,322
  18,348
  20,490
  22,745
  25,111
  27,588
  30,175
  32,873
  35,682
  38,605
  41,644
  44,803
  48,085
  51,496
  55,042
  58,727
  62,560
  66,547
  70,698
  75,019
  79,521
  84,214
  89,108
  94,214
Working capital, $m
  -565
  -673
  -791
  -920
  -1,059
  -1,209
  -1,369
  -1,539
  -1,719
  -1,908
  -2,106
  -2,314
  -2,531
  -2,757
  -2,993
  -3,238
  -3,493
  -3,758
  -4,033
  -4,319
  -4,616
  -4,926
  -5,247
  -5,581
  -5,929
  -6,292
  -6,670
  -7,063
  -7,474
  -7,902
Total debt, $m
  3,407
  5,020
  6,797
  8,736
  10,836
  13,091
  15,500
  18,057
  20,761
  23,607
  26,594
  29,721
  32,986
  36,392
  39,938
  43,627
  47,463
  51,450
  55,594
  59,900
  64,375
  69,027
  73,865
  78,898
  84,137
  89,592
  95,275
  101,198
  107,376
  113,821
Total liabilities, $m
  8,510
  10,123
  11,900
  13,839
  15,939
  18,194
  20,603
  23,160
  25,864
  28,710
  31,697
  34,824
  38,089
  41,495
  45,041
  48,730
  52,566
  56,553
  60,697
  65,003
  69,478
  74,130
  78,968
  84,001
  89,240
  94,695
  100,378
  106,301
  112,479
  118,924
Total equity, $m
  11,189
  13,309
  15,646
  18,196
  20,956
  23,922
  27,089
  30,452
  34,006
  37,748
  41,676
  45,787
  50,081
  54,558
  59,220
  64,071
  69,115
  74,357
  79,805
  85,466
  91,350
  97,467
  103,828
  110,446
  117,334
  124,506
  131,978
  139,767
  147,889
  156,363
Total liabilities and equity, $m
  19,699
  23,432
  27,546
  32,035
  36,895
  42,116
  47,692
  53,612
  59,870
  66,458
  73,373
  80,611
  88,170
  96,053
  104,261
  112,801
  121,681
  130,910
  140,502
  150,469
  160,828
  171,597
  182,796
  194,447
  206,574
  219,201
  232,356
  246,068
  260,368
  275,287
Debt-to-equity ratio
  0.300
  0.380
  0.430
  0.480
  0.520
  0.550
  0.570
  0.590
  0.610
  0.630
  0.640
  0.650
  0.660
  0.670
  0.670
  0.680
  0.690
  0.690
  0.700
  0.700
  0.700
  0.710
  0.710
  0.710
  0.720
  0.720
  0.720
  0.720
  0.730
  0.730
Adjusted equity ratio
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568
  0.568

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,032
  2,176
  3,445
  4,838
  6,352
  7,985
  9,733
  11,595
  13,567
  15,647
  18,409
  20,700
  23,096
  25,598
  28,205
  30,921
  33,748
  36,688
  39,747
  42,928
  46,238
  49,681
  53,265
  56,998
  60,886
  64,939
  69,165
  73,574
  78,176
  82,983
Depreciation, amort., depletion, $m
  1,138
  1,204
  1,277
  1,357
  1,443
  1,536
  1,635
  1,740
  1,851
  1,967
  1,301
  1,429
  1,563
  1,703
  1,849
  2,000
  2,158
  2,321
  2,491
  2,668
  2,852
  3,043
  3,241
  3,448
  3,663
  3,887
  4,120
  4,363
  4,617
  4,882
Funds from operations, $m
  2,170
  3,380
  4,722
  6,195
  7,795
  9,520
  11,368
  13,334
  15,417
  17,614
  19,710
  22,129
  24,660
  27,301
  30,054
  32,922
  35,906
  39,010
  42,238
  45,596
  49,089
  52,724
  56,507
  60,446
  64,549
  68,826
  73,285
  77,937
  82,793
  87,864
Change in working capital, $m
  -96
  -107
  -118
  -129
  -139
  -150
  -160
  -170
  -180
  -189
  -198
  -208
  -217
  -226
  -236
  -245
  -255
  -265
  -275
  -286
  -297
  -309
  -321
  -334
  -348
  -362
  -378
  -394
  -410
  -428
Cash from operations, $m
  2,266
  3,487
  4,840
  6,324
  7,935
  9,670
  11,528
  13,504
  15,597
  17,803
  19,908
  22,337
  24,877
  27,527
  30,290
  33,167
  36,160
  39,275
  42,514
  45,882
  49,387
  53,033
  56,828
  60,780
  64,897
  69,188
  73,663
  78,331
  83,204
  88,292
Maintenance CAPEX, $m
  -290
  -349
  -416
  -488
  -568
  -654
  -747
  -846
  -951
  -1,062
  -1,178
  -1,301
  -1,429
  -1,563
  -1,703
  -1,849
  -2,000
  -2,158
  -2,321
  -2,491
  -2,668
  -2,852
  -3,043
  -3,241
  -3,448
  -3,663
  -3,887
  -4,120
  -4,363
  -4,617
New CAPEX, $m
  -1,148
  -1,278
  -1,408
  -1,537
  -1,663
  -1,787
  -1,908
  -2,026
  -2,142
  -2,255
  -2,366
  -2,477
  -2,587
  -2,698
  -2,809
  -2,923
  -3,039
  -3,159
  -3,282
  -3,411
  -3,545
  -3,686
  -3,833
  -3,987
  -4,150
  -4,322
  -4,502
  -4,693
  -4,894
  -5,106
Cash from investing activities, $m
  -1,438
  -1,627
  -1,824
  -2,025
  -2,231
  -2,441
  -2,655
  -2,872
  -3,093
  -3,317
  -3,544
  -3,778
  -4,016
  -4,261
  -4,512
  -4,772
  -5,039
  -5,317
  -5,603
  -5,902
  -6,213
  -6,538
  -6,876
  -7,228
  -7,598
  -7,985
  -8,389
  -8,813
  -9,257
  -9,723
Free cash flow, $m
  829
  1,860
  3,017
  4,298
  5,703
  7,229
  8,873
  10,633
  12,505
  14,486
  16,363
  18,559
  20,860
  23,266
  25,777
  28,395
  31,121
  33,958
  36,910
  39,980
  43,173
  46,496
  49,953
  53,551
  57,299
  61,203
  65,273
  69,518
  73,946
  78,569
Issuance/(repayment) of debt, $m
  1,455
  1,613
  1,777
  1,940
  2,099
  2,256
  2,408
  2,558
  2,703
  2,846
  2,987
  3,127
  3,266
  3,405
  3,546
  3,689
  3,836
  3,987
  4,143
  4,306
  4,475
  4,652
  4,838
  5,033
  5,239
  5,455
  5,683
  5,924
  6,177
  6,445
Issuance/(repurchase) of shares, $m
  866
  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  
  2,321
  1,613
  1,777
  1,940
  2,099
  2,256
  2,408
  2,558
  2,703
  2,846
  2,987
  3,127
  3,266
  3,405
  3,546
  3,689
  3,836
  3,987
  4,143
  4,306
  4,475
  4,652
  4,838
  5,033
  5,239
  5,455
  5,683
  5,924
  6,177
  6,445
Total cash flow (excl. dividends), $m
  3,150
  3,473
  4,794
  6,238
  7,803
  9,485
  11,282
  13,190
  15,208
  17,333
  19,350
  21,686
  24,126
  26,671
  29,323
  32,084
  34,957
  37,945
  41,053
  44,286
  47,648
  51,148
  54,791
  58,584
  62,538
  66,658
  70,956
  75,441
  80,124
  85,014
Retained Cash Flow (-), $m
  -1,898
  -2,120
  -2,336
  -2,550
  -2,760
  -2,966
  -3,167
  -3,363
  -3,554
  -3,742
  -3,928
  -4,111
  -4,294
  -4,477
  -4,662
  -4,851
  -5,044
  -5,242
  -5,448
  -5,661
  -5,884
  -6,117
  -6,361
  -6,618
  -6,888
  -7,172
  -7,472
  -7,788
  -8,122
  -8,474
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
  1,252
  1,353
  2,458
  3,688
  5,042
  6,519
  8,115
  9,827
  11,653
  13,590
  15,423
  17,575
  19,832
  22,194
  24,661
  27,234
  29,913
  32,703
  35,605
  38,624
  41,764
  45,031
  48,430
  51,967
  55,650
  59,486
  63,484
  67,653
  72,002
  76,540
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
  1,200
  1,238
  2,139
  3,037
  3,908
  4,731
  5,482
  6,142
  6,694
  7,125
  7,324
  7,500
  7,541
  7,451
  7,240
  6,921
  6,509
  6,023
  5,482
  4,908
  4,320
  3,736
  3,174
  2,647
  2,165
  1,736
  1,363
  1,047
  786
  576
Current shareholders' claim on cash, %
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3

News Corporation is a global diversified media and information services company focused on creating and distributing content to consumers and businesses throughout the world. The Company's operations are organized into five segments: News and Information Services; Book Publishing; Digital Real Estate Services; Cable Network Programming, and Other. The Company's News and Information Services segment consists primarily of Dow Jones, News Corp Australia (which includes News Limited and its subsidiaries), News UK, the New York Post and News America Marketing. Its Book Publishing segment consists of HarperCollins Publishers (together with its subsidiaries and affiliates, HarperCollins), which is a consumer book publisher. Its Digital Real Estate Services segment consists of its interest in REA Group Limited (REA Group), and its interest in Move, Inc. (Move). The Company's Cable Network Programming segment consists of FOX SPORTS Australia, a sports programming provider in Australia. _tck('aft');

FINANCIAL RATIOS  of  News Corporation (NWSA)

Valuation Ratios
P/E Ratio -9.7
Price to Sales 0.9
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 14.5
Price to Free Cash Flow 30.2
Growth Rates
Sales Growth Rate -1.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -6.5%
Financial Strength
Quick Ratio 20
Current Ratio 0
LT Debt to Equity 2.6%
Total Debt to Equity 3.5%
Interest Coverage 0
Management Effectiveness
Return On Assets -4.9%
Ret/ On Assets - 3 Yr. Avg. -1.6%
Return On Total Capital -6.4%
Ret/ On T. Cap. - 3 Yr. Avg. -2%
Return On Equity -6.6%
Return On Equity - 3 Yr. Avg. -2.1%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 44.4%
Gross Margin - 3 Yr. Avg. 43.1%
EBITDA Margin -2%
EBITDA Margin - 3 Yr. Avg. 6.2%
Operating Margin -7.6%
Oper. Margin - 3 Yr. Avg. 0.3%
Pre-Tax Margin -7.6%
Pre-Tax Margin - 3 Yr. Avg. 0.4%
Net Profit Margin -9.1%
Net Profit Margin - 3 Yr. Avg. -2.9%
Effective Tax Rate -4.6%
Eff/ Tax Rate - 3 Yr. Avg. -0.3%
Payout Ratio -20.6%

NWSA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NWSA stock intrinsic value calculation we used $9024 million for the last fiscal year's total revenue generated by News Corporation. The default revenue input number comes from 0001 income statement of News Corporation. 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 NWSA stock valuation model: a) initial revenue growth rate of 20.5% 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 NWSA is calculated based on our internal credit rating of News Corporation, 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 News Corporation.
    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 NWSA stock the variable cost ratio is equal to 21.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7056 million in the base year in the intrinsic value calculation for NWSA 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 News Corporation.

Corporate tax rate of 27% is the nominal tax rate for News Corporation. 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 NWSA 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 NWSA are equal to 62%.

Life of production assets of 19.3 years is the average useful life of capital assets used in News Corporation 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 NWSA is equal to -5.2%. 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 - $9291 million for News Corporation - 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 584.652 million for News Corporation 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 News Corporation at the current share price and the inputted number of shares is $7.2 billion.

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