3rd ICAI 2024

International Conference on Automotive Industry 2024

Mladá Boleslav, Czech Republic

the 5-year Beta from Capital IQ, however, the mentioned database does not provide historical values and due to the variability of this variable we decided to use historical data from Prof. Damodaran. The sample of companies for the calculation of this Beta includes all but one of the companies under study. The Market Risk Premium over government bonds was downloaded from Prof. Damodaran’s website and the geometric mean to the end of the year (since 1928) was always used. We then converted the beta to levered beta according to the following formula: To calculate the annual growth, we used Revenues, Market Price per Share and NOPAT. The first two were obtained in Capital IQ, the NOPAT calculation was presented above. We use revenues as the key variable for calculating growth, as in our opinion it is less manipulable than profit, and more telling for comparing companies. At the same time, market share prices are more indicative of a company’s reputation and future shareholder expectations, but are not about the company’s ability to perform as a whole (although it certainly has an impact). Data collected was as of December 31 or fiscal year-end (unless otherwise noted) and is in millions of dollars or percentages. 3. Problem Solution In Figure 1 we can see the evolution of all three variables examined, these are the medians for each year. We can positively evaluate the relationship between ROIC and WACC - except for 2009, the return on invested capital is greater than the cost of that capital. The ROIC and WACC values can be described as relatively stable. WACC has been slightly decreasing over the years and ROIC is slightly cyclical. If we exclude the fluctuation in 2009, the ROIC values for the automotive industry are between 10 and 15%. The WACC stays within 10 %. Furthermore, we can see a large fluctuation in the growth of companies’ sales in 2010 and 2011, which indicates market volatility after the receding crisis. We can also observe a certain cyclicality in growth, which lasts around 3-5 years. Figure 1 also shows the relationship between return on invested capital and sales growth. We can observe that ROIC is much more stable than growth and does not respond as much to market fluctuations.

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