Intrinsic value of Sony ADR - SNE

Previous Close

$51.13

  Intrinsic Value

$3,730

stock screener

  Rating & Target

str. buy

+999%

Previous close

$51.13

 
Intrinsic value

$3,730

 
Up/down potential

+999%

 
Rating

str. buy

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

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 6.1

 

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, %
  8.90
  8.51
  8.16
  7.84
  7.56
  7.30
  7.07
  6.87
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.59
  5.53
  5.47
  5.43
  5.38
  5.35
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
Revenue, $m
  81,386
  88,312
  95,518
  103,009
  110,795
  118,887
  127,295
  136,034
  145,120
  154,568
  164,399
  174,631
  185,286
  196,387
  207,958
  220,026
  232,617
  245,761
  259,488
  273,829
  288,819
  304,493
  320,887
  338,040
  355,994
  374,790
  394,474
  415,093
  436,694
  459,331
Variable operating expenses, $m
  30,926
  33,479
  36,135
  38,896
  41,767
  44,749
  47,849
  51,070
  54,419
  57,902
  60,601
  64,373
  68,300
  72,392
  76,658
  81,106
  85,748
  90,593
  95,653
  100,939
  106,465
  112,242
  118,286
  124,609
  131,227
  138,156
  145,411
  153,012
  160,975
  169,319
Fixed operating expenses, $m
  41,652
  42,568
  43,504
  44,462
  45,440
  46,439
  47,461
  48,505
  49,572
  50,663
  51,777
  52,917
  54,081
  55,271
  56,486
  57,729
  58,999
  60,297
  61,624
  62,979
  64,365
  65,781
  67,228
  68,707
  70,219
  71,764
  73,342
  74,956
  76,605
  78,290
Total operating expenses, $m
  72,578
  76,047
  79,639
  83,358
  87,207
  91,188
  95,310
  99,575
  103,991
  108,565
  112,378
  117,290
  122,381
  127,663
  133,144
  138,835
  144,747
  150,890
  157,277
  163,918
  170,830
  178,023
  185,514
  193,316
  201,446
  209,920
  218,753
  227,968
  237,580
  247,609
Operating income, $m
  8,809
  12,265
  15,878
  19,651
  23,589
  27,698
  31,985
  36,459
  41,128
  46,003
  52,020
  57,342
  62,905
  68,724
  74,814
  81,191
  87,871
  94,871
  102,212
  109,911
  117,989
  126,469
  135,373
  144,724
  154,548
  164,871
  175,720
  187,125
  199,115
  211,722
EBITDA, $m
  12,176
  15,840
  19,669
  23,667
  27,838
  32,190
  36,729
  41,465
  46,407
  51,565
  56,952
  62,581
  68,463
  74,616
  81,053
  87,791
  94,849
  102,244
  109,996
  118,126
  126,654
  135,604
  145,000
  154,866
  165,228
  176,115
  187,555
  199,578
  212,216
  225,502
Interest expense (income), $m
  121
  635
  1,311
  2,016
  2,749
  3,511
  4,303
  5,126
  5,981
  6,871
  7,795
  8,756
  9,756
  10,797
  11,881
  13,010
  14,188
  15,415
  16,696
  18,033
  19,430
  20,889
  22,414
  24,008
  25,676
  27,421
  29,248
  31,160
  33,162
  35,260
  37,457
Earnings before tax, $m
  8,173
  10,954
  13,863
  16,902
  20,078
  23,395
  26,859
  30,477
  34,258
  38,208
  43,264
  47,585
  52,108
  56,843
  61,804
  67,003
  72,455
  78,175
  84,178
  90,481
  97,101
  104,056
  111,365
  119,048
  127,127
  135,624
  144,561
  153,963
  163,855
  174,265
Tax expense, $m
  2,207
  2,958
  3,743
  4,564
  5,421
  6,317
  7,252
  8,229
  9,250
  10,316
  11,681
  12,848
  14,069
  15,348
  16,687
  18,091
  19,563
  21,107
  22,728
  24,430
  26,217
  28,095
  30,068
  32,143
  34,324
  36,618
  39,031
  41,570
  44,241
  47,051
Net income, $m
  5,967
  7,997
  10,120
  12,339
  14,657
  17,078
  19,607
  22,248
  25,008
  27,892
  31,583
  34,737
  38,039
  41,495
  45,117
  48,912
  52,892
  57,068
  61,450
  66,051
  70,884
  75,961
  81,296
  86,905
  92,803
  99,005
  105,529
  112,393
  119,614
  127,213

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
  181,666
  197,125
  213,209
  229,931
  247,311
  265,372
  284,141
  303,648
  323,928
  345,019
  366,961
  389,801
  413,584
  438,363
  464,193
  491,130
  519,235
  548,574
  579,214
  611,226
  644,686
  679,671
  716,265
  754,554
  794,629
  836,586
  880,523
  926,546
  974,764
  1,025,293
Adjusted assets (=assets-cash), $m
  181,666
  197,125
  213,209
  229,931
  247,311
  265,372
  284,141
  303,648
  323,928
  345,019
  366,961
  389,801
  413,584
  438,363
  464,193
  491,130
  519,235
  548,574
  579,214
  611,226
  644,686
  679,671
  716,265
  754,554
  794,629
  836,586
  880,523
  926,546
  974,764
  1,025,293
Revenue / Adjusted assets
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
Average production assets, $m
  12,452
  13,512
  14,614
  15,760
  16,952
  18,190
  19,476
  20,813
  22,203
  23,649
  25,153
  26,718
  28,349
  30,047
  31,818
  33,664
  35,590
  37,601
  39,702
  41,896
  44,189
  46,587
  49,096
  51,720
  54,467
  57,343
  60,355
  63,509
  66,814
  70,278
Working capital, $m
  -23,683
  -25,699
  -27,796
  -29,976
  -32,241
  -34,596
  -37,043
  -39,586
  -42,230
  -44,979
  -47,840
  -50,818
  -53,918
  -57,149
  -60,516
  -64,028
  -67,692
  -71,517
  -75,511
  -79,684
  -84,046
  -88,607
  -93,378
  -98,370
  -103,594
  -109,064
  -114,792
  -120,792
  -127,078
  -133,665
Total debt, $m
  24,279
  37,327
  50,902
  65,015
  79,684
  94,927
  110,768
  127,232
  144,349
  162,149
  180,669
  199,945
  220,019
  240,932
  262,732
  285,467
  309,188
  333,950
  359,810
  386,829
  415,068
  444,596
  475,481
  507,797
  541,621
  577,032
  614,115
  652,958
  693,655
  736,301
Total liabilities, $m
  153,326
  166,374
  179,948
  194,062
  208,731
  223,974
  239,815
  256,279
  273,395
  291,196
  309,715
  328,992
  349,065
  369,979
  391,779
  414,513
  438,235
  462,997
  488,857
  515,875
  544,115
  573,643
  604,528
  636,844
  670,667
  706,078
  743,161
  782,005
  822,701
  865,347
Total equity, $m
  28,340
  30,752
  33,261
  35,869
  38,581
  41,398
  44,326
  47,369
  50,533
  53,823
  57,246
  60,809
  64,519
  68,385
  72,414
  76,616
  81,001
  85,578
  90,357
  95,351
  100,571
  106,029
  111,737
  117,710
  123,962
  130,507
  137,362
  144,541
  152,063
  159,946
Total liabilities and equity, $m
  181,666
  197,126
  213,209
  229,931
  247,312
  265,372
  284,141
  303,648
  323,928
  345,019
  366,961
  389,801
  413,584
  438,364
  464,193
  491,129
  519,236
  548,575
  579,214
  611,226
  644,686
  679,672
  716,265
  754,554
  794,629
  836,585
  880,523
  926,546
  974,764
  1,025,293
Debt-to-equity ratio
  0.860
  1.210
  1.530
  1.810
  2.070
  2.290
  2.500
  2.690
  2.860
  3.010
  3.160
  3.290
  3.410
  3.520
  3.630
  3.730
  3.820
  3.900
  3.980
  4.060
  4.130
  4.190
  4.260
  4.310
  4.370
  4.420
  4.470
  4.520
  4.560
  4.600
Adjusted equity ratio
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,967
  7,997
  10,120
  12,339
  14,657
  17,078
  19,607
  22,248
  25,008
  27,892
  31,583
  34,737
  38,039
  41,495
  45,117
  48,912
  52,892
  57,068
  61,450
  66,051
  70,884
  75,961
  81,296
  86,905
  92,803
  99,005
  105,529
  112,393
  119,614
  127,213
Depreciation, amort., depletion, $m
  3,367
  3,575
  3,791
  4,015
  4,249
  4,492
  4,744
  5,006
  5,279
  5,562
  4,932
  5,239
  5,559
  5,892
  6,239
  6,601
  6,979
  7,373
  7,785
  8,215
  8,665
  9,135
  9,627
  10,141
  10,680
  11,244
  11,834
  12,453
  13,101
  13,780
Funds from operations, $m
  9,333
  11,571
  13,910
  16,354
  18,906
  21,570
  24,351
  27,255
  30,287
  33,454
  36,515
  39,976
  43,597
  47,387
  51,355
  55,513
  59,871
  64,441
  69,235
  74,266
  79,548
  85,095
  90,923
  97,046
  103,483
  110,249
  117,364
  124,845
  132,715
  140,993
Change in working capital, $m
  -1,936
  -2,015
  -2,097
  -2,180
  -2,266
  -2,355
  -2,447
  -2,543
  -2,644
  -2,750
  -2,861
  -2,977
  -3,101
  -3,230
  -3,367
  -3,512
  -3,664
  -3,825
  -3,994
  -4,173
  -4,362
  -4,561
  -4,771
  -4,992
  -5,225
  -5,470
  -5,728
  -6,000
  -6,286
  -6,587
Cash from operations, $m
  11,269
  13,587
  16,007
  18,534
  21,172
  23,925
  26,798
  29,798
  32,931
  36,204
  39,376
  42,954
  46,698
  50,617
  54,723
  59,025
  63,535
  68,266
  73,229
  78,439
  83,910
  89,656
  95,694
  102,038
  108,707
  115,719
  123,092
  130,845
  139,001
  147,580
Maintenance CAPEX, $m
  -2,248
  -2,442
  -2,649
  -2,866
  -3,090
  -3,324
  -3,567
  -3,819
  -4,081
  -4,354
  -4,637
  -4,932
  -5,239
  -5,559
  -5,892
  -6,239
  -6,601
  -6,979
  -7,373
  -7,785
  -8,215
  -8,665
  -9,135
  -9,627
  -10,141
  -10,680
  -11,244
  -11,834
  -12,453
  -13,101
New CAPEX, $m
  -986
  -1,060
  -1,102
  -1,146
  -1,191
  -1,238
  -1,286
  -1,337
  -1,390
  -1,446
  -1,504
  -1,565
  -1,630
  -1,698
  -1,770
  -1,846
  -1,926
  -2,011
  -2,100
  -2,194
  -2,293
  -2,398
  -2,508
  -2,624
  -2,747
  -2,876
  -3,012
  -3,155
  -3,305
  -3,463
Cash from investing activities, $m
  -3,234
  -3,502
  -3,751
  -4,012
  -4,281
  -4,562
  -4,853
  -5,156
  -5,471
  -5,800
  -6,141
  -6,497
  -6,869
  -7,257
  -7,662
  -8,085
  -8,527
  -8,990
  -9,473
  -9,979
  -10,508
  -11,063
  -11,643
  -12,251
  -12,888
  -13,556
  -14,256
  -14,989
  -15,758
  -16,564
Free cash flow, $m
  8,034
  10,085
  12,255
  14,522
  16,890
  19,363
  21,945
  24,642
  27,460
  30,405
  33,234
  36,456
  39,829
  43,360
  47,061
  50,940
  55,008
  59,276
  63,756
  68,460
  73,402
  78,594
  84,051
  89,787
  95,819
  102,163
  108,836
  115,857
  123,243
  131,016
Issuance/(repayment) of debt, $m
  12,514
  13,048
  13,574
  14,114
  14,669
  15,243
  15,841
  16,464
  17,116
  17,801
  18,520
  19,276
  20,073
  20,914
  21,800
  22,735
  23,721
  24,762
  25,860
  27,018
  28,240
  29,528
  30,885
  32,316
  33,823
  35,411
  37,083
  38,843
  40,696
  42,646
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  
  12,514
  13,048
  13,574
  14,114
  14,669
  15,243
  15,841
  16,464
  17,116
  17,801
  18,520
  19,276
  20,073
  20,914
  21,800
  22,735
  23,721
  24,762
  25,860
  27,018
  28,240
  29,528
  30,885
  32,316
  33,823
  35,411
  37,083
  38,843
  40,696
  42,646
Total cash flow (excl. dividends), $m
  20,548
  23,133
  25,830
  28,636
  31,559
  34,606
  37,786
  41,106
  44,576
  48,205
  51,754
  55,733
  59,902
  64,274
  68,861
  73,675
  78,729
  84,038
  89,616
  95,479
  101,642
  108,121
  114,936
  122,103
  129,642
  137,574
  145,919
  154,700
  163,940
  173,662
Retained Cash Flow (-), $m
  -2,384
  -2,412
  -2,509
  -2,609
  -2,711
  -2,818
  -2,928
  -3,043
  -3,164
  -3,290
  -3,423
  -3,563
  -3,710
  -3,866
  -4,029
  -4,202
  -4,384
  -4,577
  -4,780
  -4,994
  -5,220
  -5,458
  -5,709
  -5,973
  -6,252
  -6,545
  -6,854
  -7,180
  -7,522
  -7,882
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
  18,164
  20,722
  23,321
  26,027
  28,848
  31,789
  34,858
  38,063
  41,412
  44,915
  48,331
  52,170
  56,192
  60,408
  64,831
  69,472
  74,345
  79,461
  84,836
  90,485
  96,422
  102,664
  109,227
  116,130
  123,391
  131,029
  139,065
  147,520
  156,418
  165,780
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
  17,415
  18,970
  20,295
  21,431
  22,361
  23,070
  23,549
  23,790
  23,789
  23,547
  22,952
  22,263
  21,365
  20,280
  19,033
  17,654
  16,176
  14,634
  13,062
  11,498
  9,973
  8,518
  7,159
  5,915
  4,800
  3,823
  2,985
  2,282
  1,707
  1,248
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

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 101.2
Price to Sales 1
Price to Book 3
Price to Tangible Book
Price to Cash Flow 9.2
Price to Free Cash Flow 15.6
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 $74734.8063399 million for the last fiscal year's total revenue generated by Sony ADR. The default revenue input number comes from 0001 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 8.9% 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 38.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $40755 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 15.3%.

Life of production assets of 5.1 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 -29.1%. 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 - $25955.7573213 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 120.15 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 $6.1 billion.

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