STEM help / Data dialogs

Data / Financial Data

Global Currency Unit

The unit for all monetary inputs to the model, e.g., DM, Dollars, Pounds, Yen. Either type in a unit or choose from the drop-down list. Currencies are listed alphabetically by full currency name; each name is followed by the appropriate three-letter ISO code(s). For example, Francs is followed by BEF, CHF and FRF. STEM performs no currency conversions, and any changes in a dialog will be applied globally.

The selection has no mathematical effect on the model but the text is used to label the y-axis on results graphs.

Default: none.

Discount Rate

The discount rate used to calculate the net present value (NPV) of the network. Prior to STEM version 7.4, this input was defined as a constant in the Results program, but now you can tailor the discount rate to a particular model (or client).

Note: Although the Editor will allow you to define the discount rate as a time-series, we strongly recommend that you leave it as a constant unless you are a specialist in corporate valuation and must consider a specific risk event in time.

Default: Constant {0.1}

Current Year Tax Proportion

The proportion of tax charged which should be paid in the current year.

Default: Constant {0.0}. Tax is paid wholly in the following year.

Current Year Dividend Proportion

The proportion of declared dividends which should be paid as interim dividends in the current year.

Default: Constant {0.0}. Dividends are paid wholly in the following year.

Tax Relief for Loss

This group allows you to indicate how tax relief is handled.

Tax Relief Regime

A choice of four different models for handling tax relief:

None: the Tax Rate is only applied to positive Pre-Tax Profit when calculating the Tax Charge, and no tax relief is available.

Immediate: the Tax Rate is applied to Pre-Tax Profit, even if negative, in which case there will be a negative Tax Charge. Such a charge – corresponding to a credit from the government – may be appropriate where the model represents only part of the organisation’s operations, and losses in the operation being modelled can be offset for tax purposes against profits in other operations.

Limited: losses are accumulated in years when Pre-Tax Profit is negative, for a maximum number of years specified by the input Tax Relief Years. In years when Pre-Tax Profit is positive, any remaining losses are offset against tax, starting with the oldest. A Tax Charge is only levied once all relief is exhausted.

Unlimited: losses are accumulated indefinitely when Pre-Tax Profit is negative, and offset against tax when Pre-Tax Profit is positive, as above.

Default: None.

Tax Relief Years

The maximum number of years for which losses can be accumulated when limited tax relief is available (i.e., input Tax Relief Regime = Limited).

Note: Tax relief is implemented as a series of derived results, supporting limited accumulation of losses for up to five years or unlimited accumulation indefinitely. If you need to accumulate losses for more than five years for limited tax relief, it is fairly straightforward to define the necessary additional results – see 5.17 Defining results.

Note: Only values in a period, governed by the input Tax Relief Years, up to and including year –1 will affect the calculations, even if the input Tax Relief Regime = Unlimited.

Default: 5. Any remaining loss from more than five years ago is discarded.

Prior Annual Loss

Losses carried forward from the years immediately before the start of the model, used to calculate the initial tax relief available if the network makes a profit in the early years of the model run. Only values in a period, governed by the input Tax Relief Years, up to and including year –1 will affect the calculations, even if the input Tax Relief Regime = Unlimited. For example, with Tax Relief Years = 5 and Prior Annual Loss = Constant {100.0}, the total accumulated losses available in year zero will be 500. Ignoring the actual profit or loss in the following years, this relief will reduce by 100 each subsequent year if Tax Relief Regime = Limited, whereas with Unlimited it will remain at 500.

Default: Constant {0.0}.

Balance Sheet

Target Gearing

A prescription for the maximum relative proportion of debt to equity raised to satisfy the net funding requirement for a network.

Gearing = Debt/(Debt + Equity)

Default: Constant {0.5}. Equal proportions of debt and equity are raised.

Allow Negative Equity

A choice governing whether the Target Gearing input should be allowed to exceed 1.0.

No: constrains the Target Gearing to a value between 0.0 and 1.0, guaranteeing that the financial model will not borrow beyond its means (a legal constraint for many companies).

Yes: relaxes this constraint, which may be appropriate if you are modelling a venture that is only part of a larger company’s operation.

Default: No.

Average Cash Days

The average number of days contingency for Operating Costs in the current account (not including Capital Expenditure). Specify a negative value if you want to record an overdraft in the balance sheet.

Default: Constant {30.0}. The current account has enough cash to cover bills paid over a 30-day period.

Long-Term Investment Proportion

The proportion of surplus cash in long-term investments, as opposed to on deposit as liquid, short-term investments (typically marketable securities).

Default: Constant {0.0}. All surplus cash is on deposit in short-term investments.

Borrowing Payable Proportion

The proportion of Long-Term Borrowing which must be re-paid in the coming year, shown as Long-Term Borrowing Payable on the balance sheet.

Default: Constant {0.2}. Loans and bonds have an average repayment schedule of five years.

 

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