Switch to:
Broadcom Ltd  (NAS:AVGO) Net-Net Working Capital: \$-54.38 Mil (As of Jul. 2017)

In calculating the Net-Net Working Capital (NNWC), Benjamin Graham assumed that a company's accounts receivable is only worth 75% its value, its inventory is only worth 50% of its value, but its liabilities have to be paid in full. In addition, Graham believed that preferred stock belongs on the liability side of the balance sheet, not as part of capital and surplus. This is a conservative way of estimating the company's value.

Broadcom Ltd's net-net working capital per share for the quarter that ended in Jul. 2017 was \$-54.38.

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

 Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 Oct13 Oct14 Oct15 Oct16 Net-Net Working Capital 4.11 3.68 -18.99 -10.71 -64.38

 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17 Net-Net Working Capital -65.66 -64.38 -62.25 -58.52 -54.38

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.

Calculation

Broadcom Ltd's Net-Net Working Capital (NNWC) per share for the fiscal year that ended in Oct. 2016 is calculated as

 Net-Net Working Capital Per Share (A: Oct. 2016 ) = (Cash And Cash Equivalents + 0.75 * Accounts Receivable + 0.5 * Total Inventories - Total Liabilities - Preferred Stock / Shares Outstanding (Diluted Average) = (3097 + 0.75 * 2181 + 0.5 * 1400 - 31074 - 0) / 398.28 = -64.38

Broadcom Ltd's Net-Net Working Capital (NNWC) per share for the quarter that ended in Jul. 2017 is calculated as

 Net-Net Working Capital Per Share (Q: Jul. 2017 ) = (Cash And Cash Equivalents + 0.75 * Accounts Receivable + 0.5 * Total Inventories - Total Liabilities - Preferred Stock / Shares Outstanding (Diluted Average) = (5449 + 0.75 * 2417 + 0.5 * 1431 - 30140 - 0) / 407.55 = -54.38

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

In calculating the Net-Net Working Capital (NNWC), Benjamin Graham assumed that a company's accounts receivable is only worth 75% its value, its inventory is only worth 50% of its value, but its liabilities have to be paid in full.

In addition, Graham believed that preferred stock belongs on the liability side of the balance sheet, not as part of capital and surplus. In "Security Analysis", preferred stock is dubbed "an imperfect creditorship position" that is best placed on the balance sheet alongside funded debt.

This is a conservative way of estimating the company's value.

Explanation

One research study, covering the years 1970 through 1983 showed that portfolios picked at the beginning of each year, and held for one year, returned 29.4 percent, on average, over the 13-year period, compared to 11.5 percent for the S&P 500 Index. Other studies of Graham's strategy produced similar results.

Benjamin Graham looked for companies whose market values were less than two-thirds of their net-net value. They are collected under our Net-Net screener. GuruFocus also publishes a monthly Net-Net newsletter.

Related Terms

From the Internet

3 trends behind the semiconductor M&A wave, and 5 companies that could be next

- theStreet 2017-11-22 16:23:00

Qualcomm Cut Thrust

- Seekingalpha 2017-11-22 15:48:13

Qualcomm shares rise on report Broadcom considering sweetened deal

- MarketWatch 2017-11-22 15:43:00

Holiday Shopping List

- Seekingalpha 2017-11-22 13:55:05

Broad-Qualcomm Could Be Worth As Much as \$485/Sh, Says Mizuho

- Barron's 2017-11-22 09:59:00

Activist-backed Marvell Rejected Bids Before Cavium Purchase

- theStreet 2017-11-21 16:03:00

How Broadcom's audacious bid for Qualcomm could pay off in a big way

- theStreet 2017-11-21 12:05:00

Stocks You Should Target to Take Advantage of Recent Cyclical Trends

- theStreet 2017-11-21 11:28:00

Wall Street Breakfast Tencent Tops Facebook Valuation

- Seekingalpha 2017-11-21 07:00:23

Broadcom eyes big changes for Qualcomm's patent practices

- cnbc 2017-11-21 06:25:41

Locking Qualcomm Gains

- Seekingalpha 2017-11-21 05:28:39

Tracking Ole Andreas Halvorsens Viking Global Portfolio Q3 2017 Update

- Seekingalpha 2017-11-21 03:22:11

Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to \$400 per referral. ( Learn More)