3rd ICAI 2024

International Conference on Automotive Industry 2024

Mladá Boleslav, Czech Republic

The Capital IQ database was mainly used to obtain the data, followed by Professor Damodaran’s website. The source for the income tax rate was the PwC report (2024). The calculation methodology was based on Marik et al. (2018a) and Marik et al. (2018b), with slight modifications. The individual formulas used to calculate the variables:

Operating income is derived from Capital I.Q. The tax rate according to the PwC study (2024) is used 35 % for 2009-2017 and 21 % for 2017-2019.

Non-current Assets include Net PP&E, Goodwill and Other Intangibles. Total Current Assets are all items except Short-term Investments. Total Current Liabilities are net of interest bearing items, i.e. Short-term borrowings, Current Portion of Long term Debt and Current Portion of Long-term Leases. In addition, we have added research and development (R&D) costs to invested capital (compared to common practice), which we also consider as invested capital. Their inclusion generally reduces the return on invested capital (see more in chapter 3. Problem Solution).

D/V denotes the ratio of debt to total capital (V). E/V denotes the ratio of equity to total capital. Debt includes interest-bearing capital raised from Capital IQ. Equity is Market Capitalization obtained from Capital I.Q. Total capital then includes the sum of the two.

The risk-free rate of return is downloaded from the U.S. Department of Treasury and is the 30-year Daily Treasury Par Yield Curve Rate, always averaged over the entire year. The risk premium is determined by Interest Coverage (obtained from Capital IQ) and the rating from Prof. Damodarn’s website.

Beta is used from Prof. Damodaran’s website, it is Unlevered Beta. We used the average of the Auto & Truck and Auto Parts industries for each year. Another option was to use

70