Gearing also known as leverage measures the proportion of debt in a company’s capital structure. In Valutico, this is calculated using peer-based benchmarking and can be customised by the user depending on the desired capital structure assumptions.
Peer-Based Calculation Using Latest Available Financials
Valutico calculates gearing based on the most recent available peer financials at the valuation date. The system incorporates the following components for each peer:
Book Value of Interest-Bearing Debt
Cash and Cash Equivalents
Pension Liabilities
Non-Controlling Interests
Market Capitalisation
You can inspect the full breakdown of inputs and calculations for each peer by navigating to the Peers screen, clicking the three-dot menu, and selecting "Financials".
For guidance on accessing peer financials, refer to: How to View Calculations for Peers
Use of Median Gearing for Target Capital Structure
Valutico applies the median gearing ratio across all selected peers as the benchmark for the target capital structure in your valuation model. This ensures that your valuation reflects realistic industry or sector norms based on comparable companies.
Customisation in Valuation Parameters
Users can override the system-generated gearing value at any time:
Go to the Valuation screen
Open the Parameters menu
Manually adjust the gearing to reflect your own capital structure assumptions
For guidance on changing parameters, refer to How Can the Parameters for a Valuation Be Changed?
