Intrinsic value of Take-Two Interactive Software, Inc. - TTWO

Previous Close

$110.36

  Intrinsic Value

$993.86

stock screener

  Rating & Target

str. buy

+801%

Previous close

$110.36

 
Intrinsic value

$993.86

 
Up/down potential

+801%

 
Rating

str. buy

We calculate the intrinsic value of TTWO 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 12.5

 

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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  2,869
  4,432
  6,628
  9,618
  13,569
  18,654
  25,040
  32,879
  42,307
  53,437
  66,356
  81,127
  97,785
  116,345
  136,801
  159,133
  183,308
  209,287
  237,028
  266,490
  297,634
  330,428
  364,846
  400,873
  438,503
  477,743
  518,607
  561,123
  605,331
  651,279
Variable operating expenses, $m
  2,652
  4,033
  5,973
  8,614
  12,105
  16,597
  22,238
  29,163
  37,492
  47,324
  58,620
  71,669
  86,385
  102,781
  120,852
  140,580
  161,936
  184,887
  209,394
  235,421
  262,933
  291,904
  322,309
  354,136
  387,379
  422,043
  458,143
  495,703
  534,757
  575,348
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
  2,652
  4,033
  5,973
  8,614
  12,105
  16,597
  22,238
  29,163
  37,492
  47,324
  58,620
  71,669
  86,385
  102,781
  120,852
  140,580
  161,936
  184,887
  209,394
  235,421
  262,933
  291,904
  322,309
  354,136
  387,379
  422,043
  458,143
  495,703
  534,757
  575,348
Operating income, $m
  217
  399
  655
  1,004
  1,464
  2,057
  2,802
  3,716
  4,815
  6,113
  7,736
  9,458
  11,401
  13,565
  15,949
  18,553
  21,372
  24,400
  27,635
  31,070
  34,701
  38,524
  42,537
  46,737
  51,124
  55,699
  60,464
  65,420
  70,575
  75,932
EBITDA, $m
  367
  566
  847
  1,229
  1,734
  2,384
  3,200
  4,201
  5,406
  6,829
  8,480
  10,367
  12,496
  14,868
  17,482
  20,335
  23,425
  26,744
  30,289
  34,054
  38,034
  42,225
  46,623
  51,227
  56,036
  61,050
  66,272
  71,705
  77,354
  83,226
Interest expense (income), $m
  8
  0
  73
  179
  327
  530
  797
  1,141
  1,573
  2,104
  2,742
  3,495
  4,369
  5,368
  6,495
  7,751
  9,135
  10,646
  12,282
  14,040
  15,917
  17,910
  20,018
  22,237
  24,565
  27,003
  29,549
  32,204
  34,969
  37,846
  40,837
Earnings before tax, $m
  216
  326
  476
  676
  935
  1,260
  1,661
  2,142
  2,711
  3,371
  4,242
  5,090
  6,032
  7,069
  8,198
  9,418
  10,725
  12,118
  13,595
  15,153
  16,790
  18,506
  20,300
  22,172
  24,121
  26,150
  28,259
  30,451
  32,728
  35,094
Tax expense, $m
  58
  88
  129
  183
  252
  340
  448
  578
  732
  910
  1,145
  1,374
  1,629
  1,909
  2,214
  2,543
  2,896
  3,272
  3,671
  4,091
  4,533
  4,997
  5,481
  5,986
  6,513
  7,060
  7,630
  8,222
  8,837
  9,475
Net income, $m
  158
  238
  348
  494
  682
  920
  1,212
  1,564
  1,979
  2,461
  3,096
  3,715
  4,404
  5,160
  5,985
  6,875
  7,829
  8,846
  9,924
  11,061
  12,257
  13,510
  14,819
  16,185
  17,609
  19,089
  20,629
  22,229
  23,892
  25,619

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
  5,761
  8,900
  13,310
  19,312
  27,247
  37,459
  50,280
  66,021
  84,953
  107,303
  133,246
  162,906
  196,356
  233,625
  274,702
  319,544
  368,088
  420,255
  475,961
  535,121
  597,659
  663,509
  732,622
  804,966
  880,529
  959,323
  1,041,379
  1,126,754
  1,215,524
  1,307,789
Adjusted assets (=assets-cash), $m
  5,761
  8,900
  13,310
  19,312
  27,247
  37,459
  50,280
  66,021
  84,953
  107,303
  133,246
  162,906
  196,356
  233,625
  274,702
  319,544
  368,088
  420,255
  475,961
  535,121
  597,659
  663,509
  732,622
  804,966
  880,529
  959,323
  1,041,379
  1,126,754
  1,215,524
  1,307,789
Revenue / Adjusted assets
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
Average production assets, $m
  964
  1,489
  2,227
  3,232
  4,559
  6,268
  8,413
  11,047
  14,215
  17,955
  22,296
  27,259
  32,856
  39,092
  45,965
  53,469
  61,591
  70,320
  79,642
  89,541
  100,005
  111,024
  122,588
  134,693
  147,337
  160,522
  174,252
  188,537
  203,391
  218,830
Working capital, $m
  -1,888
  -2,916
  -4,362
  -6,328
  -8,928
  -12,275
  -16,476
  -21,634
  -27,838
  -35,161
  -43,663
  -53,382
  -64,343
  -76,555
  -90,015
  -104,709
  -120,616
  -137,711
  -155,965
  -175,351
  -195,843
  -217,421
  -240,069
  -263,774
  -288,535
  -314,355
  -341,243
  -369,219
  -398,308
  -428,542
Total debt, $m
  1,354
  3,313
  6,065
  9,810
  14,761
  21,133
  29,134
  38,956
  50,770
  64,716
  80,905
  99,412
  120,285
  143,541
  169,173
  197,155
  227,446
  259,998
  294,759
  331,675
  370,698
  411,789
  454,915
  500,058
  547,209
  596,377
  647,580
  700,854
  756,246
  813,820
Total liabilities, $m
  3,595
  5,554
  8,306
  12,051
  17,002
  23,374
  31,375
  41,197
  53,011
  66,957
  83,145
  101,653
  122,526
  145,782
  171,414
  199,395
  229,687
  262,239
  296,999
  333,915
  372,939
  414,030
  457,156
  502,299
  549,450
  598,617
  649,821
  703,094
  758,487
  816,061
Total equity, $m
  2,166
  3,346
  5,005
  7,261
  10,245
  14,084
  18,905
  24,824
  31,942
  40,346
  50,100
  61,253
  73,830
  87,843
  103,288
  120,149
  138,401
  158,016
  178,961
  201,205
  224,720
  249,480
  275,466
  302,667
  331,079
  360,705
  391,559
  423,659
  457,037
  491,729
Total liabilities and equity, $m
  5,761
  8,900
  13,311
  19,312
  27,247
  37,458
  50,280
  66,021
  84,953
  107,303
  133,245
  162,906
  196,356
  233,625
  274,702
  319,544
  368,088
  420,255
  475,960
  535,120
  597,659
  663,510
  732,622
  804,966
  880,529
  959,322
  1,041,380
  1,126,753
  1,215,524
  1,307,790
Debt-to-equity ratio
  0.630
  0.990
  1.210
  1.350
  1.440
  1.500
  1.540
  1.570
  1.590
  1.600
  1.610
  1.620
  1.630
  1.630
  1.640
  1.640
  1.640
  1.650
  1.650
  1.650
  1.650
  1.650
  1.650
  1.650
  1.650
  1.650
  1.650
  1.650
  1.650
  1.660
Adjusted equity ratio
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  158
  238
  348
  494
  682
  920
  1,212
  1,564
  1,979
  2,461
  3,096
  3,715
  4,404
  5,160
  5,985
  6,875
  7,829
  8,846
  9,924
  11,061
  12,257
  13,510
  14,819
  16,185
  17,609
  19,089
  20,629
  22,229
  23,892
  25,619
Depreciation, amort., depletion, $m
  150
  167
  192
  225
  270
  327
  398
  486
  591
  716
  743
  909
  1,095
  1,303
  1,532
  1,782
  2,053
  2,344
  2,655
  2,985
  3,334
  3,701
  4,086
  4,490
  4,911
  5,351
  5,808
  6,285
  6,780
  7,294
Funds from operations, $m
  308
  405
  540
  719
  952
  1,246
  1,610
  2,050
  2,571
  3,177
  3,840
  4,624
  5,499
  6,464
  7,517
  8,657
  9,882
  11,190
  12,579
  14,046
  15,590
  17,210
  18,905
  20,675
  22,520
  24,440
  26,438
  28,514
  30,672
  32,913
Change in working capital, $m
  -708
  -1,029
  -1,445
  -1,967
  -2,600
  -3,346
  -4,201
  -5,158
  -6,204
  -7,324
  -8,501
  -9,719
  -10,961
  -12,212
  -13,460
  -14,694
  -15,907
  -17,094
  -18,254
  -19,386
  -20,493
  -21,578
  -22,647
  -23,706
  -24,761
  -25,819
  -26,889
  -27,976
  -29,089
  -30,234
Cash from operations, $m
  1,016
  1,434
  1,985
  2,686
  3,552
  4,593
  5,812
  7,208
  8,774
  10,500
  12,341
  14,343
  16,460
  18,676
  20,977
  23,351
  25,789
  28,285
  30,833
  33,432
  36,083
  38,789
  41,553
  44,381
  47,281
  50,260
  53,326
  56,490
  59,760
  63,147
Maintenance CAPEX, $m
  -20
  -32
  -50
  -74
  -108
  -152
  -209
  -280
  -368
  -474
  -598
  -743
  -909
  -1,095
  -1,303
  -1,532
  -1,782
  -2,053
  -2,344
  -2,655
  -2,985
  -3,334
  -3,701
  -4,086
  -4,490
  -4,911
  -5,351
  -5,808
  -6,285
  -6,780
New CAPEX, $m
  -362
  -525
  -738
  -1,004
  -1,328
  -1,709
  -2,145
  -2,634
  -3,168
  -3,740
  -4,341
  -4,963
  -5,597
  -6,236
  -6,873
  -7,503
  -8,123
  -8,729
  -9,321
  -9,899
  -10,464
  -11,019
  -11,564
  -12,105
  -12,644
  -13,184
  -13,730
  -14,286
  -14,854
  -15,439
Cash from investing activities, $m
  -382
  -557
  -788
  -1,078
  -1,436
  -1,861
  -2,354
  -2,914
  -3,536
  -4,214
  -4,939
  -5,706
  -6,506
  -7,331
  -8,176
  -9,035
  -9,905
  -10,782
  -11,665
  -12,554
  -13,449
  -14,353
  -15,265
  -16,191
  -17,134
  -18,095
  -19,081
  -20,094
  -21,139
  -22,219
Free cash flow, $m
  634
  877
  1,197
  1,607
  2,117
  2,732
  3,457
  4,294
  5,238
  6,287
  7,401
  8,637
  9,954
  11,345
  12,801
  14,316
  15,884
  17,503
  19,168
  20,878
  22,634
  24,436
  26,287
  28,190
  30,147
  32,164
  34,245
  36,396
  38,622
  40,929
Issuance/(repayment) of debt, $m
  1,346
  1,959
  2,752
  3,745
  4,951
  6,372
  8,001
  9,822
  11,814
  13,946
  16,188
  18,508
  20,873
  23,256
  25,632
  27,982
  30,291
  32,552
  34,760
  36,916
  39,024
  41,091
  43,126
  45,142
  47,152
  49,167
  51,203
  53,274
  55,393
  57,574
Issuance/(repurchase) of shares, $m
  654
  942
  1,310
  1,763
  2,301
  2,920
  3,609
  4,355
  5,139
  5,943
  6,658
  7,437
  8,174
  8,853
  9,460
  9,986
  10,423
  10,768
  11,021
  11,183
  11,257
  11,250
  11,167
  11,016
  10,803
  10,537
  10,224
  9,872
  9,486
  9,073
Cash from financing (excl. dividends), $m  
  2,000
  2,901
  4,062
  5,508
  7,252
  9,292
  11,610
  14,177
  16,953
  19,889
  22,846
  25,945
  29,047
  32,109
  35,092
  37,968
  40,714
  43,320
  45,781
  48,099
  50,281
  52,341
  54,293
  56,158
  57,955
  59,704
  61,427
  63,146
  64,879
  66,647
Total cash flow (excl. dividends), $m
  2,633
  3,778
  5,259
  7,116
  9,369
  12,023
  15,067
  18,470
  22,191
  26,176
  30,248
  34,582
  39,001
  43,453
  47,892
  52,283
  56,599
  60,823
  64,949
  68,977
  72,915
  76,777
  80,581
  84,348
  88,102
  91,868
  95,673
  99,541
  103,500
  107,575
Retained Cash Flow (-), $m
  -812
  -1,180
  -1,658
  -2,257
  -2,983
  -3,839
  -4,821
  -5,919
  -7,118
  -8,403
  -9,755
  -11,152
  -12,577
  -14,013
  -15,445
  -16,861
  -18,252
  -19,615
  -20,945
  -22,244
  -23,514
  -24,760
  -25,986
  -27,201
  -28,412
  -29,626
  -30,853
  -32,101
  -33,378
  -34,692
Prev. year cash balance distribution, $m
  135
  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
  1,956
  2,598
  3,601
  4,859
  6,385
  8,184
  10,246
  12,552
  15,073
  17,772
  20,493
  23,429
  26,424
  29,440
  32,448
  35,422
  38,346
  41,209
  44,004
  46,733
  49,401
  52,017
  54,594
  57,147
  59,690
  62,242
  64,819
  67,440
  70,123
  72,883
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
  1,876
  2,378
  3,134
  4,001
  4,949
  5,939
  6,922
  7,845
  8,658
  9,317
  9,732
  9,998
  10,047
  9,884
  9,526
  9,002
  8,344
  7,589
  6,775
  5,938
  5,110
  4,316
  3,578
  2,911
  2,322
  1,816
  1,391
  1,043
  765
  549
Current shareholders' claim on cash, %
  94.6
  89.9
  85.9
  82.4
  79.4
  76.8
  74.5
  72.5
  70.8
  69.3
  67.9
  66.7
  65.7
  64.8
  64.0
  63.2
  62.6
  62.0
  61.5
  61.0
  60.6
  60.3
  60.0
  59.7
  59.4
  59.2
  59.0
  58.8
  58.7
  58.5

Take-Two Interactive Software, Inc. is a developer, publisher and marketer of entertainment for consumers around the world. The Company develops and publishes products through its labels, Rockstar Games and 2K. It operates through publishing segment. It has a portfolio of software content for the hardware platforms in a range of genres, including action, adventure, family/casual, racing, role-playing, shooter, sports and strategy, which it distributes across the world. The Company's products are designed for console gaming systems, such as PlayStation 3 and PlayStation 4; Xbox 360 and Xbox One, and personal computers, including smartphones and tablets. Rockstar Games is the developer and publisher of Grand Theft Auto, as well as other franchises, including L.A. Noire, Max Payne, Midnight Club and Red Dead. 2K publishes owned and licensed titles across a range of genres. It has internal development studios in Canada, China, Czech Republic, the United Kingdom and the United States.

FINANCIAL RATIOS  of  Take-Two Interactive Software, Inc. (TTWO)

Valuation Ratios
P/E Ratio 169
Price to Sales 6.4
Price to Book 11.3
Price to Tangible Book
Price to Cash Flow 34.2
Price to Free Cash Flow 36.5
Growth Rates
Sales Growth Rate 25.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -43.2%
Cap. Spend. - 3 Yr. Gr. Rate -6.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 25.1%
Total Debt to Equity 25.1%
Interest Coverage 11
Management Effectiveness
Return On Assets 2.6%
Ret/ On Assets - 3 Yr. Avg. -3.7%
Return On Total Capital 5.7%
Ret/ On T. Cap. - 3 Yr. Avg. -6.5%
Return On Equity 8.5%
Return On Equity - 3 Yr. Avg. -11.3%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 42.5%
Gross Margin - 3 Yr. Avg. 37.2%
EBITDA Margin 19.4%
EBITDA Margin - 3 Yr. Avg. 6.2%
Operating Margin 5.2%
Oper. Margin - 3 Yr. Avg. -6.5%
Pre-Tax Margin 4.3%
Pre-Tax Margin - 3 Yr. Avg. -7.9%
Net Profit Margin 3.8%
Net Profit Margin - 3 Yr. Avg. -7.5%
Effective Tax Rate 13%
Eff/ Tax Rate - 3 Yr. Avg. 29.9%
Payout Ratio 0%

TTWO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TTWO stock intrinsic value calculation we used $1793 million for the last fiscal year's total revenue generated by Take-Two Interactive Software, Inc.. The default revenue input number comes from 0001 income statement of Take-Two Interactive Software, Inc.. 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 TTWO stock valuation model: a) initial revenue growth rate of 60% 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 TTWO is calculated based on our internal credit rating of Take-Two Interactive Software, Inc., 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 Take-Two Interactive Software, Inc..
    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 TTWO stock the variable cost ratio is equal to 94.9%.

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 TTWO 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 Take-Two Interactive Software, Inc..

Corporate tax rate of 27% is the nominal tax rate for Take-Two Interactive Software, Inc.. 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 TTWO 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 TTWO are equal to 33.6%.

Life of production assets of 34.8 years is the average useful life of capital assets used in Take-Two Interactive Software, Inc. 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 TTWO is equal to -65.8%. 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 - $1488.97 million for Take-Two Interactive Software, Inc. - 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 113.201 million for Take-Two Interactive Software, Inc. 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 Take-Two Interactive Software, Inc. at the current share price and the inputted number of shares is $12.5 billion.

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