It is possible to calculate this value for NLMK PJSC and compare it with the target value.
Posted: Wed Jan 22, 2025 10:04 am
As we can see, this indicator shows a downward trend. It has decreased by 1/3. Thus, each ruble earned contains a smaller portion of debt.
A positive aspect is the compliance with the target values of the Net Debt/EBITDA ratio already in 2020, when it was less than 3. In 2021, it also remained at a level not exceeding 1. Consequently, NLMK PJSC needs less than one year to fully repay its debt, based on the value of EBITDA and profit before accrued taxes, depreciation and amortization, and interest payments.
Download a useful document on the topic:
Checklist: How to Achieve Your Goals in Negotiations with Clients
EV/EBITDA, EV/EBIT indicators
The objective value of an advantages of truemoney database enterprise (EV) is often used as a value against which the size of “import” profit is compared.
Calculating this coefficient can cause problems. The fact is that it requires information on the market capitalization of the enterprise. And while it is quite easy to estimate it for companies whose shares are in stock exchange circulation, for the rest this indicator must be calculated on the basis of other data.
The objective value of a company is calculated as follows:
EV = Market capitalization + Long-term debt (line 1410 of the balance sheet) + Short-term debt (line 1510) – Cash and cash equivalents (line 1250)
When assessing EV, the market price of the enterprise is adjusted for its net financial debt, including borrowed funds and cash flow. When the owner of a company changes, the new owner receives not only the assets, but also the liabilities of the balance sheet. If the company's cash flow is subtracted from the amount of outstanding liabilities, then the amount of the latter will decrease, but the indicator of free cash will also decrease.
Having determined the objective price of the company, it must be divided by the amount of profit - EBITDA or EBIT (used less often). The result of the calculation will be the desired indicator. For example, when using EBITDA and profit before taxes payable, depreciation, interest payments, amortization, the formula is as follows:
EV/EBITDA = EV / EBITDA
Based on the obtained value, one can judge how many years the enterprise will need to earn a profit equivalent to its value. Thus, the investor can estimate how long it will take for EBITDA to fully recoup the investment.
A low value of the coefficient indicates that the company is undervalued, which is a positive moment for sponsors. At the same time, the points of view on what value reflects under- and overvaluation are very different. Some economists name the number 3, others - 10. In any case, a small value of this coefficient allows investors to count on a quick return on investment, and for the company means an undervalued share price.
The indicator in question has a significant drawback - it is susceptible to fluctuations. On February 25, 2022, ordinary shares of NLMK PJSC were traded at a price of 177.5 rubles per share, although a week earlier they cost 226.9 rubles. Of course, the start of the SVO played a key role here. There are 5,993.23 million unprivileged shares placed on the exchange. It is easy to calculate that against the backdrop of political cataclysms during the week, the market value fell by 296 billion rubles, although there were no purely economic reasons for this.
These findings are supported by several graphs below.
EV/EBITDA ratio
EV/EBIT ratio
Promotion parameters
Let's estimate the value of the indicator. The market price can be used according to the investfunds.ru website data for October 1, 2022. We will take other values from the 2021 report. Of course, the dates for which the calculated values are taken must be the same, but in this case this condition can be neglected.
A positive aspect is the compliance with the target values of the Net Debt/EBITDA ratio already in 2020, when it was less than 3. In 2021, it also remained at a level not exceeding 1. Consequently, NLMK PJSC needs less than one year to fully repay its debt, based on the value of EBITDA and profit before accrued taxes, depreciation and amortization, and interest payments.
Download a useful document on the topic:
Checklist: How to Achieve Your Goals in Negotiations with Clients
EV/EBITDA, EV/EBIT indicators
The objective value of an advantages of truemoney database enterprise (EV) is often used as a value against which the size of “import” profit is compared.
Calculating this coefficient can cause problems. The fact is that it requires information on the market capitalization of the enterprise. And while it is quite easy to estimate it for companies whose shares are in stock exchange circulation, for the rest this indicator must be calculated on the basis of other data.
The objective value of a company is calculated as follows:
EV = Market capitalization + Long-term debt (line 1410 of the balance sheet) + Short-term debt (line 1510) – Cash and cash equivalents (line 1250)
When assessing EV, the market price of the enterprise is adjusted for its net financial debt, including borrowed funds and cash flow. When the owner of a company changes, the new owner receives not only the assets, but also the liabilities of the balance sheet. If the company's cash flow is subtracted from the amount of outstanding liabilities, then the amount of the latter will decrease, but the indicator of free cash will also decrease.
Having determined the objective price of the company, it must be divided by the amount of profit - EBITDA or EBIT (used less often). The result of the calculation will be the desired indicator. For example, when using EBITDA and profit before taxes payable, depreciation, interest payments, amortization, the formula is as follows:
EV/EBITDA = EV / EBITDA
Based on the obtained value, one can judge how many years the enterprise will need to earn a profit equivalent to its value. Thus, the investor can estimate how long it will take for EBITDA to fully recoup the investment.
A low value of the coefficient indicates that the company is undervalued, which is a positive moment for sponsors. At the same time, the points of view on what value reflects under- and overvaluation are very different. Some economists name the number 3, others - 10. In any case, a small value of this coefficient allows investors to count on a quick return on investment, and for the company means an undervalued share price.
The indicator in question has a significant drawback - it is susceptible to fluctuations. On February 25, 2022, ordinary shares of NLMK PJSC were traded at a price of 177.5 rubles per share, although a week earlier they cost 226.9 rubles. Of course, the start of the SVO played a key role here. There are 5,993.23 million unprivileged shares placed on the exchange. It is easy to calculate that against the backdrop of political cataclysms during the week, the market value fell by 296 billion rubles, although there were no purely economic reasons for this.
These findings are supported by several graphs below.
EV/EBITDA ratio
EV/EBIT ratio
Promotion parameters
Let's estimate the value of the indicator. The market price can be used according to the investfunds.ru website data for October 1, 2022. We will take other values from the 2021 report. Of course, the dates for which the calculated values are taken must be the same, but in this case this condition can be neglected.