Formulas presented in our research
Average market cap is the average market capitalisation of the companies in each industry group. Market capitalisation is measured as ordinary shares outstanding times by the last recorded sale price for each company.
Market capitalisation = ordinary shares outstanding x last recorded sale price
Enterprise value to EBITDA is measured as the average for each industry group of the enterprise value to EBITDA of the constituent companies, where enterprise value is measured as:
Enterprise value = market capitalisation + net debt + preferred stock
And net debt is measured as:
Net debt = total debt – cash – marketable securities
EBITDA is earnings before interest, tax, depreciation and amortisation for each company for the last full financial year.
Enterprise value to EBIT is measured as the average for each industry group of the enterprise value to EBIT of the constituent companies.
EBIT is earnings before interest and tax for each company for the last full financial year.
Market cap to net profit after tax is measured as the average for each industry group of the ratio of the average market capitalisation to the last reported full year net profit after tax of the constituent companies.
= Market capitalisation / net profit after tax
Asset beta is measured as the average for each industry group of asset betas of the constituent companies, where asset beta is calculated from the observed equity beta for each of the companies.
Asset beta = Equity beta/(1 + net debt / market capitalisation)
The equity beta (or levered beta) for each company in the sample is calculated by using an OLS regression approach. This calculation is raw or unadjusted.
Debt to enterprise value is measured as the average for each industry group of the ratio of net debt to enterprise value for each of the constituent companies.
Debt to debt plus equity = net debt / enterprise value
Return on assets (5 year average) is calculated for each company as the average return on assets for the prior five financial years. This result is then averaged across the constituent companies in each industry group.
Return on assets is calculated as:
Return on assets = EBIT / average total assets
Where average total assets, is the average of the closing total assets for the current financial year and the closing total assets for the prior financial year.
WACC or weighted average cost of capital, is calculated as the average for each industry group of the WACC for each of the constituent companies. WACC is calculated according to the country of listed of the companies according to the following formulas:
New Zealand
Australia
For further details of our cost of capital model specification or the other metrics calculated please contact our Corporate Finance team on cfin.auckland@nz.gt.com