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QuestionsCategory: Valuation QuadrantCalculating Net Debt Per Share
Jeremy Keck asked 2 years ago

Hi guys, referring to the calculation of PE ratio for both Vicom and Nestle example in the textbook. 
Have some question, for the example of Vicom – since the share price as of 19 Apr 2019, to calculate the Net Cash per Share, do we use the 2018 Annual Report? Also how do we calculate the Net Cash per Share. 
 
Similarly, how do we calculate Dividend per Share and the Dividend Yield based on Sustainable Dividend? 

Jieren Zheng replied 2 years ago

Are you trying to find earnings or cash per share? They aren’t the same thing.

Dividend per share can be obtained from the annual report under the financial highlights (where they show the past 5-10 years). Yield would be divided by the closing price of the financial year. Sustainable dividends would be looking at the dividend payout ratio. Would be either dividends per share divided by earnings per share or free cashflow per share.

Victor Chng replied 2 years ago

Thank you JR

Jeremy Keck replied 2 years ago

Thanks Jieren. hmmm so once to get the ratio, we look at e financial highlights in the annual report to obtain the dividend per share and then compare it with the latest quarter’s eps or e free cashflow per share?

Jieren Zheng replied 2 years ago

Yea once you get the numbers you can get an estimate from the latest past 12 months EPS or last year EPS. The same for FCF per share.

Jeremy Keck replied 2 years ago

thanks man!

Jieren Zheng replied 2 years ago

Welcome :)

1 Answers
Victor Chng answered 2 years ago

Hi Jeremy,
 
The net cash per share formula is to take the cash position minus the debt and then divide it by the number of shares.
When choosing net cash per share, you should always get the figure from the latest quarter of the company.
 
As for dividend per share and dividend yield formula is as per what Jieren had explained. For Vicom’s case, the dividend given out is more than their earnings. As the management mentioned that they will pay out 90% of earnings hence I take 90% of the earning to calculate the sustainable dividend.  

Jeremy Keck replied 2 years ago

Hi Victor, need some help with this, getting very confused. :x if i take reference from the 3Q 2019 Financials.

The EPS -> is it 0.08 (at page 9)

The average EPS (for 5 yrs) -> will have to look at every quarters’ EPS for the last 5 years?

The Net Cash Per Share – [Cash & cash equivalent – total current & non-current liabilities]/[no of shares in latest quarter] = (page 2) 84976 – 71996 / (page 8) 88642 = $0.146?

Dividend Per Share-> Dividend – Special Dividend / no of shares = from the Group financial highlights 2018, page 2 [Total dividend per shares – special dividend per shares] = 45.25 – 8.62 = 36.63 cents?

Apologise for the spam, rather confused with all these figures.

Victor Chng replied 2 years ago

Hi Jeremy,

1.The EPS should take from the latest full year result. So your average 5 years should be the past 5 years full year result EPS

2.Net Cash Per Share = Cash & cash equivalent – Total Debt (Which are all your bank loan, bonds or notes) divided by number of share. Based on Vicom 3Q2019 results, the cash is about $85m while the company have zero debt. so the net cash is $85m.

3. For dividend per share you are correct.

Keep up the good work Jeremy. We are happy to answer your questions. :)

Jeremy Keck replied 2 years ago

thanks Victor! shall go see if i really get it using Nestle