Intrinsic value of Vodafone Group Plc - VOD

Previous Close

$16.00

  Intrinsic Value

$67.77

stock screener

  Rating & Target

str. buy

+324%

Previous close

$16.00

 
Intrinsic value

$67.77

 
Up/down potential

+324%

 
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 43.8

 

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
  70,929
  77,156
  83,639
  90,382
  97,391
  104,676
  112,247
  120,114
  128,291
  136,793
  145,636
  154,837
  164,416
  174,392
  184,787
  195,624
  206,928
  218,724
  231,039
  243,902
  257,342
  271,392
  286,084
  301,453
  317,536
  334,370
  351,996
  370,455
  389,792
  410,053
Variable operating expenses, $m
  38,030
  40,839
  43,764
  46,806
  49,968
  53,254
  56,669
  60,218
  63,907
  67,743
  65,699
  69,850
  74,171
  78,671
  83,360
  88,249
  93,349
  98,670
  104,225
  110,028
  116,091
  122,429
  129,057
  135,990
  143,245
  150,840
  158,791
  167,118
  175,841
  184,981
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
  73,386
  77,133
  81,016
  85,042
  89,215
  93,542
  98,030
  96,652
  101,484
  106,501
  111,713
  117,129
  122,760
  128,620
  134,717
  141,065
  147,678
  154,569
  161,754
  169,247
  177,064
  185,223
  193,741
  202,636
  211,928
  221,637
  231,784
Operating income, $m
  7,999
  10,869
  13,867
  16,996
  20,259
  23,660
  27,204
  30,898
  34,749
  38,763
  48,984
  53,353
  57,915
  62,679
  67,658
  72,864
  78,309
  84,007
  89,974
  96,224
  102,773
  109,638
  116,837
  124,389
  132,312
  140,629
  149,360
  158,527
  168,155
  178,268
EBITDA, $m
  28,912
  33,089
  37,448
  41,991
  46,725
  51,654
  56,787
  62,131
  67,697
  73,496
  79,538
  85,838
  92,409
  99,267
  106,426
  113,906
  121,722
  129,896
  138,446
  147,394
  156,763
  166,576
  176,857
  187,633
  198,931
  210,780
  223,208
  236,249
  249,933
  264,297
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
  9,736
  10,534
  11,365
  12,229
  13,130
  14,069
  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
  32,577
Earnings before tax, $m
  4,741
  7,080
  9,516
  12,059
  14,713
  17,482
  20,368
  23,379
  26,519
  29,795
  39,248
  42,819
  46,550
  50,450
  54,528
  58,795
  63,262
  67,940
  72,842
  77,979
  83,367
  89,019
  94,950
  101,175
  107,711
  114,576
  121,787
  129,363
  137,324
  145,692
Tax expense, $m
  1,280
  1,912
  2,569
  3,256
  3,973
  4,720
  5,499
  6,312
  7,160
  8,045
  10,597
  11,561
  12,569
  13,621
  14,723
  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
  37,078
  39,337
Net income, $m
  3,461
  5,168
  6,947
  8,803
  10,741
  12,762
  14,869
  17,066
  19,359
  21,751
  28,651
  31,258
  33,982
  36,828
  39,806
  42,920
  46,181
  49,596
  53,174
  56,925
  60,858
  64,984
  69,313
  73,858
  78,629
  83,640
  88,904
  94,435
  100,247
  106,355

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
  221,652
  241,113
  261,371
  282,443
  304,348
  327,113
  350,770
  375,355
  400,909
  427,478
  455,112
  483,866
  513,799
  544,975
  577,460
  611,326
  646,650
  683,512
  721,996
  762,193
  804,194
  848,100
  894,012
  942,041
  992,299
  1,044,906
  1,099,987
  1,157,673
  1,218,101
  1,281,416
Adjusted assets (=assets-cash), $m
  221,652
  241,113
  261,371
  282,443
  304,348
  327,113
  350,770
  375,355
  400,909
  427,478
  455,112
  483,866
  513,799
  544,975
  577,460
  611,326
  646,650
  683,512
  721,996
  762,193
  804,194
  848,100
  894,012
  942,041
  992,299
  1,044,906
  1,099,987
  1,157,673
  1,218,101
  1,281,416
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
  80,937
  87,737
  94,810
  102,164
  109,805
  117,747
  125,999
  134,577
  143,496
  152,772
  162,424
  172,472
  182,937
  193,842
  205,210
  217,068
  229,441
  242,360
  255,853
  269,952
  284,690
  300,102
  316,224
  333,095
  350,754
  369,244
  388,608
  408,892
  430,146
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
  -38,859
  -40,980
  -43,199
  -45,519
  -47,948
  -50,490
  -53,151
  -55,939
  -58,859
  -61,918
Total debt, $m
  70,171
  80,583
  91,421
  102,694
  114,413
  126,593
  139,249
  152,402
  166,074
  180,288
  195,072
  210,456
  226,470
  243,149
  260,528
  278,647
  297,545
  317,266
  337,855
  359,360
  381,831
  405,320
  429,884
  455,579
  482,467
  510,612
  540,080
  570,942
  603,271
  637,144
Total liabilities, $m
  118,584
  128,996
  139,834
  151,107
  162,826
  175,006
  187,662
  200,815
  214,486
  228,701
  243,485
  258,869
  274,883
  291,561
  308,941
  327,059
  345,958
  365,679
  386,268
  407,773
  430,244
  453,733
  478,297
  503,992
  530,880
  559,025
  588,493
  619,355
  651,684
  685,557
Total equity, $m
  103,068
  112,118
  121,538
  131,336
  141,522
  152,108
  163,108
  174,540
  186,423
  198,777
  211,627
  224,998
  238,917
  253,413
  268,519
  284,267
  300,692
  317,833
  335,728
  354,420
  373,950
  394,366
  415,716
  438,049
  461,419
  485,881
  511,494
  538,318
  566,417
  595,858
Total liabilities and equity, $m
  221,652
  241,114
  261,372
  282,443
  304,348
  327,114
  350,770
  375,355
  400,909
  427,478
  455,112
  483,867
  513,800
  544,974
  577,460
  611,326
  646,650
  683,512
  721,996
  762,193
  804,194
  848,099
  894,013
  942,041
  992,299
  1,044,906
  1,099,987
  1,157,673
  1,218,101
  1,281,415
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
  3,461
  5,168
  6,947
  8,803
  10,741
  12,762
  14,869
  17,066
  19,359
  21,751
  28,651
  31,258
  33,982
  36,828
  39,806
  42,920
  46,181
  49,596
  53,174
  56,925
  60,858
  64,984
  69,313
  73,858
  78,629
  83,640
  88,904
  94,435
  100,247
  106,355
Depreciation, amort., depletion, $m
  20,914
  22,220
  23,581
  24,995
  26,466
  27,994
  29,582
  31,233
  32,949
  34,732
  30,554
  32,485
  34,494
  36,587
  38,768
  41,042
  43,414
  45,888
  48,472
  51,171
  53,990
  56,938
  60,020
  63,245
  66,619
  70,151
  73,849
  77,722
  81,778
  86,029
Funds from operations, $m
  24,375
  27,389
  30,527
  33,799
  37,207
  40,756
  44,451
  48,299
  52,307
  56,483
  59,206
  63,743
  68,476
  73,416
  78,574
  83,962
  89,595
  95,484
  101,646
  108,096
  114,848
  121,922
  129,334
  137,102
  145,248
  153,791
  162,753
  172,156
  182,025
  192,384
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
  -2,122
  -2,219
  -2,321
  -2,428
  -2,542
  -2,662
  -2,787
  -2,920
  -3,059
Cash from operations, $m
  25,277
  28,329
  31,506
  34,817
  38,265
  41,856
  45,594
  49,487
  53,542
  57,767
  60,541
  65,132
  69,922
  74,922
  80,144
  85,599
  91,302
  97,266
  103,506
  110,038
  116,878
  124,043
  131,552
  139,423
  147,677
  156,333
  165,414
  174,944
  184,945
  195,443
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
  -43,414
  -45,888
  -48,472
  -51,171
  -53,990
  -56,938
  -60,020
  -63,245
  -66,619
  -70,151
  -73,849
  -77,722
  -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
  -10,905
  -11,368
  -11,858
  -12,374
  -12,918
  -13,493
  -14,099
  -14,738
  -15,412
  -16,122
  -16,871
  -17,659
  -18,490
  -19,364
  -20,285
  -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
  -47,492
  -50,136
  -52,900
  -55,788
  -58,806
  -61,965
  -65,270
  -68,728
  -72,350
  -76,142
  -80,116
  -84,278
  -88,641
  -93,213
  -98,007
  -103,031
Free cash flow, $m
  5,364
  6,915
  8,518
  10,196
  11,950
  13,781
  15,692
  17,685
  19,764
  21,933
  22,566
  24,926
  27,390
  29,963
  32,652
  35,462
  38,402
  41,478
  44,699
  48,073
  51,608
  55,315
  59,202
  63,281
  67,561
  72,055
  76,774
  81,731
  86,939
  92,412
Issuance/(repayment) of debt, $m
  9,838
  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
  18,119
  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  
  15,108
  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
  18,119
  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
  20,472
  21,208
  21,830
  22,464
  23,669
  25,961
  28,349
  30,838
  33,436
  36,147
  37,350
  40,309
  43,404
  46,642
  50,031
  53,581
  57,300
  61,199
  65,288
  69,578
  74,079
  78,804
  83,765
  88,976
  94,449
  100,200
  106,242
  112,593
  119,268
  126,285
Retained Cash Flow (-), $m
  -8,731
  -9,049
  -9,420
  -9,798
  -10,186
  -10,586
  -11,001
  -11,432
  -11,883
  -12,355
  -12,850
  -13,371
  -13,919
  -14,496
  -15,106
  -15,748
  -16,426
  -17,141
  -17,895
  -18,691
  -19,531
  -20,416
  -21,349
  -22,333
  -23,370
  -24,462
  -25,613
  -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
  11,742
  12,159
  12,410
  12,666
  13,483
  15,375
  17,348
  19,406
  21,553
  23,792
  24,500
  26,939
  29,485
  32,145
  34,926
  37,833
  40,875
  44,059
  47,393
  50,887
  54,548
  58,388
  62,416
  66,643
  71,079
  75,737
  80,630
  85,769
  91,169
  96,844
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
  11,313
  11,627
  11,779
  11,771
  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 Plc (VOD)

Valuation Ratios
P/E Ratio -64.1
Price to Sales 8.5
Price to Book 5.6
Price to Tangible Book
Price to Cash Flow 28.4
Price to Free Cash Flow 75.3
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 $64953 million for the last fiscal year's total revenue generated by Vodafone Group Plc. The default revenue input number comes from 0001 income statement of Vodafone Group Plc. 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 Plc, 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 Plc.
    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 Plc.

Corporate tax rate of 27% is the nominal tax rate for Vodafone Group Plc. 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 Plc 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 Plc - 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 2738.971 million for Vodafone Group Plc 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 Plc at the current share price and the inputted number of shares is $43.8 billion.

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