Intrinsic value of Vodafone Group ADR - VOD

Previous Close

$20.11

  Intrinsic Value

$69.58

stock screener

  Rating & Target

str. buy

+246%

Previous close

$20.11

 
Intrinsic value

$69.58

 
Up/down potential

+246%

 
Rating

str. buy

We calculate the intrinsic value of VOD 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 53.6

 

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, %
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.34
  5.30
  5.27
  5.24
  5.22
  5.20
Revenue, $m
  70,928
  77,156
  83,638
  90,381
  97,391
  104,676
  112,246
  120,113
  128,290
  136,792
  145,635
  154,836
  164,415
  174,391
  184,786
  195,623
  206,927
  218,722
  231,037
  243,900
  257,340
  271,390
  286,082
  301,451
  317,534
  334,368
  351,993
  370,453
  389,790
  410,050
Variable operating expenses, $m
  38,030
  40,839
  43,764
  46,805
  49,968
  53,254
  56,669
  60,218
  63,907
  67,742
  65,698
  69,849
  74,170
  78,670
  83,360
  88,249
  93,348
  98,669
  104,225
  110,027
  116,090
  122,428
  129,056
  135,989
  143,245
  150,839
  158,790
  167,117
  175,840
  184,980
Fixed operating expenses, $m
  24,900
  25,448
  26,008
  26,580
  27,165
  27,762
  28,373
  28,997
  29,635
  30,287
  30,953
  31,634
  32,330
  33,042
  33,769
  34,511
  35,271
  36,047
  36,840
  37,650
  38,478
  39,325
  40,190
  41,074
  41,978
  42,901
  43,845
  44,810
  45,796
  46,803
Total operating expenses, $m
  62,930
  66,287
  69,772
  73,385
  77,133
  81,016
  85,042
  89,215
  93,542
  98,029
  96,651
  101,483
  106,500
  111,712
  117,129
  122,760
  128,619
  134,716
  141,065
  147,677
  154,568
  161,753
  169,246
  177,063
  185,223
  193,740
  202,635
  211,927
  221,636
  231,783
Operating income, $m
  7,998
  10,869
  13,867
  16,996
  20,259
  23,659
  27,204
  30,898
  34,748
  38,763
  48,983
  53,353
  57,914
  62,679
  67,657
  72,863
  78,308
  84,007
  89,973
  96,223
  102,772
  109,637
  116,836
  124,387
  132,311
  140,628
  149,358
  158,526
  168,154
  178,267
EBITDA, $m
  28,912
  33,089
  37,447
  41,991
  46,724
  51,653
  56,786
  62,131
  67,697
  73,495
  79,538
  85,837
  92,408
  99,266
  106,426
  113,905
  121,721
  129,895
  138,445
  147,393
  156,762
  166,574
  176,856
  187,632
  198,930
  210,778
  223,207
  236,247
  249,932
  264,295
Interest expense (income), $m
  1,334
  3,258
  3,789
  4,351
  4,937
  5,545
  6,178
  6,836
  7,519
  8,230
  8,968
  9,735
  10,534
  11,365
  12,229
  13,130
  14,068
  15,047
  16,067
  17,132
  18,244
  19,405
  20,619
  21,887
  23,214
  24,601
  26,053
  27,573
  29,164
  30,831
  32,576
Earnings before tax, $m
  4,740
  7,079
  9,516
  12,059
  14,713
  17,481
  20,368
  23,378
  26,519
  29,795
  39,248
  42,819
  46,550
  50,449
  54,528
  58,795
  63,261
  67,939
  72,841
  77,979
  83,366
  89,018
  94,949
  101,174
  107,710
  114,575
  121,785
  129,362
  137,323
  145,690
Tax expense, $m
  1,280
  1,911
  2,569
  3,256
  3,973
  4,720
  5,499
  6,312
  7,160
  8,045
  10,597
  11,561
  12,568
  13,621
  14,722
  15,875
  17,081
  18,344
  19,667
  21,054
  22,509
  24,035
  25,636
  27,317
  29,082
  30,935
  32,882
  34,928
  37,077
  39,336
Net income, $m
  3,460
  5,168
  6,946
  8,803
  10,741
  12,761
  14,869
  17,066
  19,359
  21,750
  28,651
  31,258
  33,981
  36,828
  39,805
  42,920
  46,181
  49,596
  53,174
  56,924
  60,857
  64,983
  69,313
  73,857
  78,628
  83,639
  88,903
  94,434
  100,246
  106,354

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
  221,651
  241,112
  261,370
  282,441
  304,346
  327,111
  350,768
  375,353
  400,907
  427,476
  455,109
  483,863
  513,796
  544,971
  577,456
  611,322
  646,646
  683,508
  721,992
  762,188
  804,189
  848,094
  894,007
  942,035
  992,293
  1,044,899
  1,099,980
  1,157,665
  1,218,093
  1,281,407
Adjusted assets (=assets-cash), $m
  221,651
  241,112
  261,370
  282,441
  304,346
  327,111
  350,768
  375,353
  400,907
  427,476
  455,109
  483,863
  513,796
  544,971
  577,456
  611,322
  646,646
  683,508
  721,992
  762,188
  804,189
  848,094
  894,007
  942,035
  992,293
  1,044,899
  1,099,980
  1,157,665
  1,218,093
  1,281,407
Revenue / Adjusted assets
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
Average production assets, $m
  74,404
  80,936
  87,737
  94,810
  102,163
  109,805
  117,746
  125,998
  134,576
  143,495
  152,771
  162,423
  172,471
  182,936
  193,840
  205,209
  217,066
  229,440
  242,358
  255,851
  269,950
  284,688
  300,100
  316,222
  333,093
  350,752
  369,241
  388,605
  408,889
  430,143
Working capital, $m
  -10,710
  -11,651
  -12,629
  -13,648
  -14,706
  -15,806
  -16,949
  -18,137
  -19,372
  -20,656
  -21,991
  -23,380
  -24,827
  -26,333
  -27,903
  -29,539
  -31,246
  -33,027
  -34,887
  -36,829
  -38,858
  -40,980
  -43,198
  -45,519
  -47,948
  -50,490
  -53,151
  -55,938
  -58,858
  -61,918
Total debt, $m
  70,170
  80,582
  91,420
  102,693
  114,412
  126,592
  139,248
  152,401
  166,072
  180,287
  195,071
  210,454
  226,468
  243,147
  260,526
  278,645
  297,543
  317,264
  337,853
  359,358
  381,828
  405,318
  429,881
  455,576
  482,464
  510,608
  540,076
  570,938
  603,267
  637,140
Total liabilities, $m
  118,583
  128,995
  139,833
  151,106
  162,825
  175,005
  187,661
  200,814
  214,485
  228,699
  243,484
  258,867
  274,881
  291,560
  308,939
  327,057
  345,956
  365,677
  386,266
  407,770
  430,241
  453,730
  478,294
  503,989
  530,877
  559,021
  588,489
  619,351
  651,680
  685,553
Total equity, $m
  103,068
  112,117
  121,537
  131,335
  141,521
  152,107
  163,107
  174,539
  186,422
  198,776
  211,626
  224,996
  238,915
  253,412
  268,517
  284,265
  300,690
  317,831
  335,726
  354,417
  373,948
  394,364
  415,713
  438,046
  461,416
  485,878
  511,491
  538,314
  566,413
  595,854
Total liabilities and equity, $m
  221,651
  241,112
  261,370
  282,441
  304,346
  327,112
  350,768
  375,353
  400,907
  427,475
  455,110
  483,863
  513,796
  544,972
  577,456
  611,322
  646,646
  683,508
  721,992
  762,187
  804,189
  848,094
  894,007
  942,035
  992,293
  1,044,899
  1,099,980
  1,157,665
  1,218,093
  1,281,407
Debt-to-equity ratio
  0.680
  0.720
  0.750
  0.780
  0.810
  0.830
  0.850
  0.870
  0.890
  0.910
  0.920
  0.940
  0.950
  0.960
  0.970
  0.980
  0.990
  1.000
  1.010
  1.010
  1.020
  1.030
  1.030
  1.040
  1.050
  1.050
  1.060
  1.060
  1.070
  1.070
Adjusted equity ratio
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,460
  5,168
  6,946
  8,803
  10,741
  12,761
  14,869
  17,066
  19,359
  21,750
  28,651
  31,258
  33,981
  36,828
  39,805
  42,920
  46,181
  49,596
  53,174
  56,924
  60,857
  64,983
  69,313
  73,857
  78,628
  83,639
  88,903
  94,434
  100,246
  106,354
Depreciation, amort., depletion, $m
  20,914
  22,220
  23,580
  24,995
  26,466
  27,994
  29,582
  31,233
  32,948
  34,732
  30,554
  32,485
  34,494
  36,587
  38,768
  41,042
  43,413
  45,888
  48,472
  51,170
  53,990
  56,938
  60,020
  63,244
  66,619
  70,150
  73,848
  77,721
  81,778
  86,029
Funds from operations, $m
  24,374
  27,388
  30,527
  33,798
  37,206
  40,755
  44,451
  48,299
  52,307
  56,482
  59,205
  63,742
  68,476
  73,415
  78,573
  83,962
  89,594
  95,484
  101,645
  108,095
  114,847
  121,921
  129,333
  137,101
  145,247
  153,790
  162,752
  172,155
  182,024
  192,383
Change in working capital, $m
  -902
  -940
  -979
  -1,018
  -1,058
  -1,100
  -1,143
  -1,188
  -1,235
  -1,284
  -1,335
  -1,389
  -1,446
  -1,506
  -1,570
  -1,636
  -1,707
  -1,781
  -1,860
  -1,942
  -2,030
  -2,121
  -2,218
  -2,321
  -2,428
  -2,542
  -2,661
  -2,787
  -2,920
  -3,059
Cash from operations, $m
  25,277
  28,329
  31,506
  34,816
  38,265
  41,855
  45,594
  49,487
  53,542
  57,766
  60,540
  65,132
  69,922
  74,922
  80,143
  85,598
  91,301
  97,265
  103,505
  110,037
  116,877
  124,042
  131,551
  139,422
  147,675
  156,332
  165,413
  174,942
  184,944
  195,442
Maintenance CAPEX, $m
  -13,623
  -14,881
  -16,187
  -17,547
  -18,962
  -20,433
  -21,961
  -23,549
  -25,200
  -26,915
  -28,699
  -30,554
  -32,485
  -34,494
  -36,587
  -38,768
  -41,042
  -43,413
  -45,888
  -48,472
  -51,170
  -53,990
  -56,938
  -60,020
  -63,244
  -66,619
  -70,150
  -73,848
  -77,721
  -81,778
New CAPEX, $m
  -6,289
  -6,533
  -6,800
  -7,073
  -7,353
  -7,642
  -7,941
  -8,253
  -8,578
  -8,919
  -9,276
  -9,652
  -10,048
  -10,465
  -10,904
  -11,368
  -11,858
  -12,374
  -12,918
  -13,493
  -14,099
  -14,738
  -15,412
  -16,122
  -16,871
  -17,659
  -18,489
  -19,364
  -20,284
  -21,253
Cash from investing activities, $m
  -19,912
  -21,414
  -22,987
  -24,620
  -26,315
  -28,075
  -29,902
  -31,802
  -33,778
  -35,834
  -37,975
  -40,206
  -42,533
  -44,959
  -47,491
  -50,136
  -52,900
  -55,787
  -58,806
  -61,965
  -65,269
  -68,728
  -72,350
  -76,142
  -80,115
  -84,278
  -88,639
  -93,212
  -98,005
  -103,031
Free cash flow, $m
  5,365
  6,915
  8,518
  10,196
  11,950
  13,781
  15,692
  17,685
  19,764
  21,932
  22,565
  24,926
  27,389
  29,963
  32,651
  35,462
  38,402
  41,478
  44,699
  48,072
  51,608
  55,314
  59,201
  63,280
  67,560
  72,054
  76,773
  81,730
  86,938
  92,411
Issuance/(repayment) of debt, $m
  9,837
  10,412
  10,838
  11,273
  11,719
  12,179
  12,656
  13,153
  13,671
  14,214
  14,784
  15,383
  16,014
  16,679
  17,379
  18,118
  18,898
  19,721
  20,589
  21,505
  22,471
  23,489
  24,563
  25,695
  26,888
  28,145
  29,468
  30,862
  32,329
  33,873
Issuance/(repurchase) of shares, $m
  5,270
  3,881
  2,474
  995
  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  
  15,107
  14,293
  13,312
  12,268
  11,719
  12,179
  12,656
  13,153
  13,671
  14,214
  14,784
  15,383
  16,014
  16,679
  17,379
  18,118
  18,898
  19,721
  20,589
  21,505
  22,471
  23,489
  24,563
  25,695
  26,888
  28,145
  29,468
  30,862
  32,329
  33,873
Total cash flow (excl. dividends), $m
  20,471
  21,208
  21,830
  22,464
  23,669
  25,960
  28,348
  30,838
  33,435
  36,147
  37,349
  40,309
  43,403
  46,641
  50,031
  53,580
  57,300
  61,199
  65,288
  69,577
  74,078
  78,803
  83,765
  88,975
  94,448
  100,199
  106,241
  112,592
  119,267
  126,284
Retained Cash Flow (-), $m
  -8,730
  -9,049
  -9,420
  -9,798
  -10,186
  -10,586
  -11,000
  -11,432
  -11,883
  -12,354
  -12,850
  -13,371
  -13,919
  -14,496
  -15,105
  -15,748
  -16,426
  -17,141
  -17,895
  -18,691
  -19,531
  -20,416
  -21,349
  -22,333
  -23,370
  -24,462
  -25,612
  -26,824
  -28,099
  -29,441
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
  11,741
  12,159
  12,410
  12,666
  13,483
  15,374
  17,348
  19,406
  21,553
  23,792
  24,500
  26,938
  29,485
  32,145
  34,925
  37,832
  40,874
  44,058
  47,393
  50,886
  54,548
  58,388
  62,415
  66,642
  71,078
  75,737
  80,629
  85,768
  91,168
  96,843
Discount rate, %
  4.70
  4.94
  5.18
  5.44
  5.71
  6.00
  6.30
  6.61
  6.94
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.77
  11.31
  11.88
  12.47
  13.09
  13.75
  14.44
  15.16
  15.92
  16.71
  17.55
  18.42
  19.35
PV of cash for distribution, $m
  11,214
  11,042
  10,665
  10,247
  10,213
  10,839
  11,312
  11,626
  11,779
  11,770
  10,883
  10,652
  10,283
  9,791
  9,194
  8,513
  7,769
  6,986
  6,187
  5,393
  4,623
  3,896
  3,225
  2,620
  2,086
  1,628
  1,243
  928
  676
  481
Current shareholders' claim on cash, %
  92.6
  87.9
  85.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2
  84.2

Vodafone Group Plc (Vodafone) is a telecommunications company. The Company's business is organized into two geographic regions: Europe, and Africa, Middle East and Asia Pacific (AMAP). Its segments include Europe and AMAP. Its Europe segment includes geographic regions, such as Germany, Italy, the United Kingdom, Spain and Other Europe. The Other Europe includes the Netherlands, Portugal, Greece, Hungary and Romania, among others. Its AMAP segment includes India, South Africa, Tanzania, Mozambique, Lesotho, Africa, Turkey, Australia, Egypt, Ghana, Kenya, New Zealand and Qatar, among others. The Company provides a range of services, including voice, messaging and data across mobile and fixed networks. The Company acquires spectrum and licenses to use radio frequencies that deliver mobile services. Its fixed capabilities include cable, fiber and copper networks to enable television, broadband and voice services.

FINANCIAL RATIOS  of  Vodafone Group ADR (VOD)

Valuation Ratios
P/E Ratio -80.6
Price to Sales 10.6
Price to Book 7
Price to Tangible Book
Price to Cash Flow 35.7
Price to Free Cash Flow 94.6
Growth Rates
Sales Growth Rate -4.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -36.2%
Cap. Spend. - 3 Yr. Gr. Rate 3%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 47.4%
Total Debt to Equity 57.7%
Interest Coverage 3
Management Effectiveness
Return On Assets -4.4%
Ret/ On Assets - 3 Yr. Avg. 7.6%
Return On Total Capital -5.1%
Ret/ On T. Cap. - 3 Yr. Avg. -1.1%
Return On Equity -8.1%
Return On Equity - 3 Yr. Avg. -1.9%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 27.4%
Gross Margin - 3 Yr. Avg. 27.1%
EBITDA Margin 31.8%
EBITDA Margin - 3 Yr. Avg. 29.1%
Operating Margin 7.8%
Oper. Margin - 3 Yr. Avg. 4.9%
Pre-Tax Margin 5.9%
Pre-Tax Margin - 3 Yr. Avg. 3%
Net Profit Margin -13.2%
Net Profit Margin - 3 Yr. Avg. -3%
Effective Tax Rate 170.6%
Eff/ Tax Rate - 3 Yr. Avg. -923.9%
Payout Ratio -59%

VOD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VOD stock intrinsic value calculation we used $64952.5801953 million for the last fiscal year's total revenue generated by Vodafone Group ADR. The default revenue input number comes from 0001 income statement of Vodafone Group 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 VOD stock valuation model: a) initial revenue growth rate of 9.2% 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 4.7%, whose default value for VOD is calculated based on our internal credit rating of Vodafone Group 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 Vodafone Group 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 VOD stock the variable cost ratio is equal to 54.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $24364 million in the base year in the intrinsic value calculation for VOD 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 Vodafone Group ADR.

Corporate tax rate of 27% is the nominal tax rate for Vodafone Group 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 VOD 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 VOD are equal to 104.9%.

Life of production assets of 0 years is the average useful life of capital assets used in Vodafone Group 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 VOD is equal to -15.1%. 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 - $94337.5174338 million for Vodafone Group 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 2667.66 million for Vodafone Group 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 Vodafone Group ADR at the current share price and the inputted number of shares is $53.6 billion.

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