Common Size Income Statement Analysis: The Market Cap Of Eisaalat

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Market Capitalization:

It is the number of outstanding share multiplied by the share price of one share. It is used by the investment community to understand the firms size viz Large –cap, small-cap or mid-cap. Larger the Market Capitalization lesser the risk associated with the stock. The market Cap of Etisalat is increasing trend YoY shows the increase in price per share and the high valuation the investment community places on Etisalat share price.

Common Size Income Statement Analysis
Net Sales
It represents the sales generated by the company after returns are deducted, allowances for missing and damaged goods accounted for and if any discount is given. As we can see the net sales value remains the same which indicates the sales of the company
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WACC gives the cost of this capital raised by putting appropriate weights on the cost of equity and the cost of debt
R_f=risk free rate (govt. security bonds) R_m-R_f=risk premium β_M=systematic risk (regression of stock returns of company on market return)
The cost of equity is calculated via capital asset pricing model. Cost of debt is calculated by taking the interest rate for the year 2013 as Interest/EBIT.
WACC based on book value is calculated based on the book values of equity and debt and turns out to be about 3.64% while that based on market value is 3.579%. The return on capital employed is 14.311% which is way higher. The firm can thus expect higher and growing returns when it invests in the market and it would continue to grow. 2.Value of the firm
We have assumed an annual growth of 2% after 2013 and we have FCFF values for the year from 2004 to 2013. By taking our WACC as the required rate of return the present value of the firm has been calculated after taking care of the perpetuity component. The value of the firm as calculated on this basis turns out to be 69.62 billion AED.
Value of the firm=Value of equity + Value of

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