Assessment task 1: Business Report

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Weighted Average Cost of Capital (WACC) Report

BX2014 Principle of Finance

Accenture PLC

Prepared for: Dr TY Thong

Prepared by: Nathasya Arifin

Student id: 13778509

27 January 2021

Table of Contents

Introduction ……………………………………………………………………………………………………………… 1

Weighted Average Cost of Capital (WACC) ………………………………………………………………. 2

Calculating the Cost of Equity (Re) …………………………………………………………………………… 3

Calculating the Cost of Debt (Rd) …………………………………………………………………………….. 4

The calculation of WACC ……………………………………………………………………………………….. 5

Return on Invested Capital (ROIC) …………………………………………………………………………… 5

Profitability analysis of WACC and ROIC ………………………………………………………………… 6

Gearing Ratios ………………………………………………………………………………………………………….. 7

Debt-to-Equity Ratio ……………………………………………………………………………………………….. 8

Interest Coverage Ratio ………………………………………………………………………………………….. 10

Conclusion and Recommendation ……………………………………………………………………………. 12

Reflection ……………………………………………………………………………………………………………….. 13

1. Market Value Weights or Accounting Books Value in calculating WACC ……………. 13

2. Risk Free rate of return …………………………………………………………………………………… 14

3. Beta in CAPM ……………………………………………………………………………………………….. 14

References ………………………………………………………………………………………………………………. 15

Appendices ……………………………………………………………………………………………………………….. 4

Introduction

Established in 1951, Accenture PLC is a leading global professional services company

with 506,000 employees serving clients in more than 120 countries (Accenture, n.d.).

Accenture PLC is known for its leadership in management and technology consulting

services and solutions in strategy, technology, consulting, digital, and operations. Accenture

work at the intersection of business and technology to help clients improve their performance

and create sustainable value for stakeholder. It has been operating in Singapore since 1975

and serves many types of clients across Southeast Asia including, government and large

companies and organizations (Accenture, n.d.).

On 19 July 2001, Accenture commenced trading and went public on the New York

Stock Exchange under the symbol ACN and $14.50 per share (Accenture, 2001). As of now,

Accenture per share has increased to $255.56 (Bloomberg, 2021). Despite fierce competitors

like McKinsey & Co., Boston Consulting Group, Inc., and Bain & Co., which is equally

known as the “big three”; Accenture has accomplished many awards. It has been awarded for

being number one in the IT services category for five consecutive years (2014-2018)

(Accenture, n.d.). Moreover, Accenture has been chosen as a Leader in Gartner’s 2020 Magic

Quadrant for Data Center Outsourcing and Hybrid Managed Infrastructure Services

(Accenture, n.d.). This proves Accenture’s capability and excellency in Information

Technology services like digital, cloud, and security.

This report aims to assess and analyse Accenture’s Weighted Average Cost of Capital

(WACC), the relationship of WACC with Return on Investment (ROIC), and two Gearing

ratios – Debt-to-equity Ratio and Interest Coverage Ratio. This values are then compared

over the three years period from 2018 to 2020, as well as to one of Accenture’s competitors,

Capgemini SE. Furthermore, at the end of the report, a conclusion and recommendations for

the Board of Directors will be drawn followed by the reflection on my research and report.

Weighted Average Cost of Capital (WACC)

According to Corporate Finance Institute (n.d.), the Weighted Average Cost of Capital

(WACC) is used to compute the cost of each part of the firm’s capital structure based on the

debt, equity, and preferred stock. WACC is also known as the discount rate, where it assesses

the value of an asset and determining whether a project is feasible or not in the net present

value (NPV) (Lee, n.d.).

It represents a company’s proportional average of capital across all sources, including

common shares, preferred shares, bonds, and any other long-term debt (Lee, n.d.). These

costs are then weighted and added together as shown underneath:

WACC formula includes the company’s cost of debt and equity. Therefore, based on

the 2020 annual report and the data obtained from the Bloomberg terminal, Accenture’s cost

of equity (Re) and cost of debt (Rd) need to be calculated first before the WACC is

calculated.

Calculating the Cost of Equity (Re)

Cost of Equity represents the rate of return that a shareholder expects to receive from

an investment in the business (Accounting tool, 2020). It is the cost that investors expect to

be compensated, in exchange for the associated ownership risk it takes in owning the stocks

of the business. In general, two approaches can be used to calculate the cost of equity of a

firm – the Dividend Growth Model (DGM) and the Capital Asset Pricing Model (CAPM). In

this report, due to its convenience, CAPM is used to calculate Accenture’s cost of equity. This

CAPM method is also known as the Security Market Line (SML). The formula to calculate

the cost of equity (Re) is shown below:

As seen in the appendix section A4,

= 1.11 + 7.45

= 8.56%

Hence, Accenture cost of equity (Re) for the year 2020 is 8.56%.

Calculating the Cost of Debt (Rd)

The cost of debt is the return that a company provides to its debtholders and creditors

(Corporate Finance Institute [CFI], n.d.). To put it simply, it is the return provided to

compensate for the risk exposure that comes with lending to a company. The cost of debt

reflects the default risk of a company and the interest rate in the market. As the cost of debt

(Rd) is needed in calculating WACC, the formula below is used to calculate the cost of debt

(Rd).

Where:

SD = Short-term debt

LD = Long-term debt

TD = Total Debt

TN = Average Rate of Treasury Notes

TB = Treasury Bond

AF = Debt Adjustment Factor

TR = Tax rate

Thus, based on the data from appendix A6, Accenture cost of debt (Rd) for the year 2020 is:

As the cost of debt is smaller than the cost of equity, this shows a good sign for

Accenture’s as well as to the Investors. This is because investors require a higher return than

creditors.

The calculation of WACC

Now that the cost of equity (Re) and cost of debt (Rd) has been found, Accenture’s

WACC for the year 2020 can be calculated. [Figures are obtained from calculation above and

appendix A3]

Accenture WACC for the year 2020 is 8.00%. This means that the company needs to

pay its investor an average of $0.08 in return for every $1 funding. In order to convince more

investor to invest in Accenture, Return on Invested Capital (ROIC) need to be observed. As if

the value of ROIC is greater than the WACC, investors would likely want to invest in the

company. Therefore, to determine the profitability of Accenture, ROIC in the year 2020 will

be calculated.

Return on Invested Capital (ROIC)

Return on Invested Capital (ROIC) measures profitability or performance ratio on how

much an investor is earning on the capital invested (Carlson, 2019). ROIC is useful for

investors to compare with the WACC, as it helps investors to find out whether values are

added or lost over a period. Moreover, compare to ROA and ROE, ROIC is more effective in

finding out a company’s ability. ROIC can additionally be used to build a firm’s value in the

eye of investors. Hence, ROIC proves to be a significant measure of how a firm is performing.

ROIC is calculated by the formula shown below:

ROIC = ??? ????????? ?????? ????? ??? (?????)

???????? ???????

A detail comparative analysis of ROIC and WACC will be shown below.

Profitability analysis of WACC and ROIC

Based on the data acquired from the Bloomberg Terminal, a comparative analysis of

Accenture’s and Capgemini’s WACC and ROIC for the financial year 2018 to 2020 are

shown below in table format:

Table 1 – Accenture’s and Capgemini’s WACC and ROIC

Accenture PLC (Appendix A1-A3) Capgemini SE (Appendix B1-B3)

Financial year WACC ROIC WACC ROIC

2018 9.9% 38.70% 10.1% 7.92%

2019 9.2% 19.32% 8.0% 7.61%

2020 8.0% 25.84% 6.5% 5.85%

Calculation:

2020 ROIC of Accenture PLC = :;<=.?< ;@=:A.B:

= 0.258394428 = 25.8%

2020 ROIC of Capgemini SE = ??C.:@ BC@=@.@

= 0.05853873 = 5.85%

Figure 1 – Accenture’s WACC and ROIC

Table 1 shows Accenture’s and Capgemini’s WACC and ROIC for the last three

financial years – 2018, 2019, and 2020. For an easier comparison between Accenture’s

WACC and ROIC, a graph is attached as shown in figure 1. It can be observed that over the

past 10 years, Accenture’s WACC does not fluctuate a lot. It has a quite stable WACC, unlike

its ROIC.

Over the past three years, Accenture’s WACC has continuously declined from 9.9% in

2018 to 9.2% in 2019 and 8.0% in 2020. Simultaneously, Accenture’s ROIC also suffered a

decrease from 38.70% in 2018 to 19.32 in 2019 and 25.84% in 2020. However, as over the

three years, Accenture’s WACC is lower than its ROIC (ROIC > WACC), which means

values are added to the company. However, if Accenture’s ROIC keeps on dropping until it is

lower than the WACC (ROIC < WACC), this means values are destroyed as company’s invest

more capital. This indicates a bad signal for investors and the company.

In comparison, Capgemini WACC and ROIC also have been decreasing the past three

years. However, its ROIC is lesser than its WACC. This means that firm’s value might be

destroyed, affecting its market share price. By comparing Accenture’s WACC and ROIC to

Capgemini, it can be seen that Accenture will earn higher profitability than Capgemini.

Hence, it can be concluded that both WACC and ROIC are important for comparison to

determine a company’s profitability and performance.

Gearing Ratios

Gearing ratios measure a company’s financial leverage or business funding that comes

from lenders or shareholders (Carlson, 2020). According to Muradoglu, Bakke, and Kvernes

(2005), gearing ratios are crucial in evaluating a company’s financial structure and

bankruptcy risk. It tends to examine the relationship between asset, equity, and debt of a

company. As a higher gearing ratio indicates higher financial risk, both lenders and investors

can use this gearing ratio to decides whether they should extend their credit or not and

whether they should invest in the company.

In this report, based on the data obtained from Bloomberg as shown in the Appendix

section, two types of Accenture gearing ratios – Debt to equity ratio and Interest coverage

ratio will be calculated and compared to its past three years and its competitors to analyze the

existence of a trend.

Debt-to-Equity Ratio

The debt-to-equity ratio is a leverage ratio that calculates the weight of total debt and

financial liabilities against the shareholder’s equity (CFI, n.d.). It can be used to measure the

risk of a business that cannot repay its financial obligation as well as an indication of how

much debt and equity a business used to finance its operation. The debt-to-equity ratio can be

calculated as follow:

Debt-to-Equity Ratio = ????? ????

????? ?????? × ???%

Where:

Total debt = Long term debt + short term debt

Calculation:

Accenture’s Debt-to-Equity ratio 2020 = (“#”$.&'(#&).*’) $,””-$.*’

= 2.29

Capgemini’s Debt-to-Equity ratio 2020 = (-))..'($$.).’) $#”#,..

= 54.86

Table 2 – Accenture’s Debt-to-Equity Ratio

Data from Appendix A1-A3

Accenture’s Debt-to-Equity ratio for the year 2018-2020

2018 2019 2020

Total Debt (USD in millions) 25.00 22.6 3,485.50

Total Equity (USD in millions) 108,159.2 126,112.2 152,281.90

Debt-to-equity ratio (times) 0.023 0.018 2.29

Table 3 – Capgemini’s Debt-to-Equity Ratio

Data from Appendix B1-B3

Capgemini’s Debt-to-Equity ratio for the year 2018-2020

2018 2019 2020

Total Debt (EUR in millions) 3,357.0 4,094.0 9,477.0

Total Equity (EUR in millions) 14,521.1 18,441.7 17,275.4

Debt-to-equity ratio (times) 23.12 22.20 54.86

In 2018 and 2019, Accenture’s had a debt-to-equity ratio of 0.023 and 0.018. As it has a

ratio lower than one, it is considered as a low debt to equity ratio. It indicates that the portion

of assets provided by the stockholders is greater than the asset provided by the creditors.

Hence, providing a greater protection of creditors money and a more financially stable

business. This results in creditors preferring a lower debt to equity ratio. In contrast, a ratio

greater than one indicates that the portion of assets provided by creditors is greater than the

portion of assets provided by stockholders (Javed, n.d.). In 2020, Accenture’s total debt and

equity have significantly increased due to the increase in cloud spending. This causes the

debt-to-equity ratio to rise from 0.018 to 2.29. This means that for every dollar of equity,

Accenture has $0.023 of debt. In the same way, it also means that shareholders own $0.23 of

every dollar of assets. Although the increase in debt to equity ratio causes creditors and

investors to consider Accenture to be riskier, Accenture’s assets are primarily funded by

equity compared to debts. Hence, they are nonetheless considered to have a low financial risk.

However, compared to Accenture’s, Capgemini’s debt-to-equity ratio is much higher

for all three financial years due to the high amount of debt Capgemini has. This shows that

Capgemini bears a higher risk of investment. In the year 2020, Capgemini has a debt of

9,477.0, two times more than in 2019. This could conceivably happen due to the Covid-19

pandemic as well as the expansion of acquiring Altran (Globe News Wire, 2020). Therefore,

Capgemini’s debt of equity ratio increased from 22.20 in 2019 to 54.86 in 2020. Leading

investors to perceive a higher financial risk towards the company. In conclusion, Accenture is

more financially stable and has a lower financial risk compared to its competitor, Capgemini.

Interest Coverage Ratio

The interest coverage ratio (ICR) is also known as time interest earned. It is a measure

of how affordable a company’s debts are given the company earnings (Constable, 2015). In

other words, it determines how efficiently a firm can pay off its share of interest expenses on

debt. To a certain extent, this formula is also used by lenders, creditors, and investors to find

out a specific firm’s risk and the profitability of the company (Groww, n.d.). To compute the

Interest coverage ratio, operating income – also known as earnings before interest and tax

(EBIT) is divided by its interest expense.

Interest Coverage ratio = ????

???????? ???????

Calculation:

Accenture’s Interest Coverage Ratio 2020 = 6,513.40 / 33.07 = 196.96 times

Capgemini’s Interest Coverage Ratio 2020 = 1,825.18 / 56.0 = 32.59 times

Table 4 – Accenture’s Interest Coverage Ratio

Data from Appendix A7

Accenture’s Interest Coverage ratio for the year 2018-2020

2018 2019 2020

EBIT (USD in millions) 5,898.78 6305.07 6,513.40

Interest Expense (USD in millions) 19.54 22.96 33.07

Interest Coverage Ratio (times) 301.88 274.61 196.96

Table 5 – Capgemini’s Interest Coverage Ratio

Data from Appendix B4

Capgemini’s Interest Coverage ratio for the year 2018-2020

2018 2019 2020

EBIT (EUR in millions) 1,431.00 1,563.00 1,825.18

Interest Expense (EUR in millions) 61.00 65.00 56.0

Interest Coverage Ratio (times) 23.46 24.05 32.59

An Interest Coverage Ratio that is lower than 1 implies poor financial health. A low

ICR means company’s debt is greater and there is a possibility of bankruptcy. In other words,

fewer operating profits are available to meet interest payments, and the company is more

volatile to interest rates (CFI, n.d.). Accenture’s ICR has continuously declined from 301.88

in 2018 to 196.96 in 2020. Despite the decrease in the ratio, Accenture ICR is still considered

as a high ratio. This indicates that the company has strong financial health and is capable to

generate cash to meet its interest obligations. In contrast, Accenture’s competitor Capgemini

has been experiencing an increase in ICR over the past three years. This shows that

Capgemini is equally capable of satisfying its creditor payment. However, a high ratio may

also indicate the company is overlooking opportunities to magnify its earnings through

leverage. Nevertheless, both Accenture and Capgemini can be an option for investors to

invest as both of them shows strong financial health. Accenture’s could be a suitable choice

for short-run investments, while Capgemini’s is good for long-run investments. Investors

willing to invest in a company will ultimately depend on how much risk an investor is willing

to take.

Conclusion and Recommendation

In conclusion, Accenture PLC is a good company that has been in a prime position for

investment in terms of profitability and gearing ratio. This report has analyzed and calculated

Accenture’s Weighted Average Cost of Capital (WACC), gearing ratios – Debt-to-Equity

Ratio and Interest Coverage Ratio, as well as Accenture’s Return on Invested Capital

(ROIC). Although Accenture’s WACC and ROIC has been declining over the three years, its

ROIC is still greater than its WACC. This shows a favorable sign for investors to invest in

Accenture. However, if ROIC continues to decline in the future, then there is a possibility

that WACC will be greater than the ROIC, which will destroy the company’s value.

Therefore, to prevent this from happening, Accenture should increase their profit and reduce

their capital or expenses (White, 2004). Accenture can try to increase its profit by increasing

its revenues and reducing its cost. For instance, Accenture can try to increase its price and

reduce the cost of staff, maintenance, and etc.

Moreover, in terms of gearing ratios, debt to equity ratio and interest coverage ratio has

been calculated. Even though the debt to equity ratio has a drastic rise in 2020 to 2.29, this is

still acceptable due to Accenture’s capital intensive. However, it is still advisable for

Accenture to work on reducing its debt-to-equity ratio. While in terms of Interest coverage

ratio, Accenture’s is considered to have a good ICR and a low possibility of bankruptcy.

Though, if in the next 10 years it continues to decline, then it could be a disaster for

Accenture. There are various ways for Accenture to improve their gearing ratios, such as

selling shares, growth in digital sales, reducing working capital, and increasing profits

(Accounting Tools, 2020).

Reflection

1. Market Value Weights or Accounting Books Value in calculating WACC

To calculate WACC, both market value and book value can be used. While calculating

Accenture’s WACC, a question regarding the use of market value or book value arises.

Market values represent the price at which an asset trades in a competitive auction setting.

While book value means the value of an asset according to its account reflected in the balance

sheet of a company. It has an actual cash value or acquisition cost. Usually, companies use

market value to calculate its WACC rather than their book values (Lumen, n.d.). To find out

the difference between these two values, the weight calculation is compared as shown below.

Accenture’s Weighted Average Cost of Capital (WACC) in 2020

Market Value Book Value

Value of the firm’s Equity (E) (USD in millions) $152,281.90 $17,499.17

Value of the firm’s Debt (D) (USD in millions) $3,485.5 $3,485.5

Total Value of Capital (E+D =V) (USD in millions) $155,767.4 $20,984.67

Percentage of Capital that is Equity (E/V) 97.80% 83.39%

Percentage of Capital that is Debt (D/V) 2.20% 16.61%

Cost of equity (Re) 8.56% 8.56%

Cost of debt (Rd) 0.85% 0.85%

Tax (T) 23.39% 23.39%

WACC 8.00% 7.28%

To calculate Accenture’s WACC, market value is used. This is because market value

reflects the true economic claim of each type of financing outstanding, whereas book value

may not (Macabacus, n.d.). Moreover, market value uses its share price to calculate the

market value of equity which represents the current market value of shareholder’s investment.

Investors also tend to demand market required rate of return on the market value of the capital

and not the book value of the capital. Hence, company tend to use market value to calculate

their WACC.

2. Risk Free rate of return

According to Stotz (2020), a risk-free rate is the minimum rate of return on investment

with theoretically no risk. However, in reality, there is no such thing as a risk-free rate. This is

because no risk implies no return. Hence, even the safest investment will retain a small

amount of risk. For example, government bonds and treasury bills are considered to be risk-

free. Government bonds are considered risk-free because the government can always issue

money to pay its bondholders. The data in this report are received from the Bloomberg

Terminal where it refers to the 10-year government bond rate (Finance&Career, 2013). This is

also known as the standard risk-free rate. 10-year government bond rate is more useful

because some countries do not issue Treasury bills consistently. Moreover, the data are more

readily available and easy to access compared to the 30-years rate. Hence, a 10-year rate will

make calculations more convenient.

3. Beta in CAPM

Beta measures the stock risk in relation to the market. It is typically used in

Capital Asset Pricing Model (CAPM) to calculate the expected return of an asset using

beta and the expected market return. A beta greater than 1 implies a higher risk and

volatility compared to the stock market. On the other hand, if the beta is lesser than 1,

it implies a less volatile than the stock market. According to Bloomberg, as seen in

Appendix A5, Accenture has a beta of 0.951 in 2020. This signifies that Accenture’s is

5% less volatile than the market. This indicates that Accenture has low volatility and

lower systematic risk than the market.

References

Accenture. (2001). Accenture Stock Begins Trading on the New York Stock Exchange.

https://newsroom.accenture.com/subjects/accenture-corporate/accenture-stock-begins-

trading-on-new-york-stock-exchange.htm

Accenture. (2020). Newsroom. https://newsroom.accenture.com/news/accenture-named-a-

leader-in-gartners-2020-magic-quadrant-for-data-center-outsourcing-and-hybrid-

managed-infrastructure-services-north-america.htm

Accenture. (n.d.). About Accenture. https://www.accenture.com/sg-

en/about/company/singapore

Accenture. (n.d.). Awards and Recognition. https://www.accenture.com/cr-en/company-

recognition-accenture-global-leader

Accounting tool. (2020). Cost of equity formula.

https://www.accountingtools.com/articles/cost-of-equity-formula.html

Accounting Tools. (2020). Gearing Ratios.

https://www.accountingtools.com/articles/2017/5/5/gearing-ratio

Bloomberg. (2021). ACN: US. https://www.bloomberg.com/quote/ACN:US

Carlson, R. (2019). Calculating Return on Invested Capital.

https://www.thebalancesmb.com/return-on-invested-capital-393587

Carlson, R. (2020). What is a Gearing Ratio. https://www.thebalancesmb.com/calculating-

gearing-ratio-393228

Constable, S. (2015, November 8). What is the interest coverage ratio. The Wall Street

Journal. https://www.wsj.com/articles/what-is-the-interest-coverage-ratio-1447038108

Corporate Finance Institute [CFI]. (n.d.). Debt Equity Ratio.

https://corporatefinanceinstitute.com/resources/knowledge/finance/debt-to-equity-ratio-

formula/

Corporate Finance Institute [CFI]. (n.d.). Interest Coverage Ratio.

https://corporatefinanceinstitute.com/resources/knowledge/finance/interest-coverage-

ratio/

Corporate Finance Institute [CFI]. (n.d.). WACC.

https://corporatefinanceinstitute.com/resources/knowledge/finance/what-is-wacc-

formula/

Corporate Finance Institute. (n.d.). Cost of Debt.

https://corporatefinanceinstitute.com/resources/knowledge/finance/cost-of-debt/

Finance&Career. (2013). What is the Risk-Free Rate and How Can It Be Used to Guide Your

Investment Decisions. https://financeandcareer.com/what-is-the-risk-free-rate-and-how-

can-it-be-used-to-guide-your-investment-decisions/

Globe News Wire. (2020). Press Release // Capgemini SE First half performance reflects the

Group’s resilience. https://www.globenewswire.com/news-

release/2020/09/03/2088145/0/en/Press-Release-Capgemini-SE-First-half-performance-

reflects-the-Group-s-resilience.html

Groww. (n.d.). Interest Coverage Ratio. https://groww.in/p/interest-coverage-ratio/

Javed, R. (n.d.). Debt to equity ratio. https://www.accountingformanagement.org/debt-to-

equity-

ratio/#:~:text=Debt%20to%20equity%20ratio%20is,stockholders’%20equity%20includ

ing%20preferred%20stock.

Lumen. (n.d.). The WACC. https://courses.lumenlearning.com/boundless-

finance/chapter/the-

wacc/#:~:text=The%20WACC%20must%20take%20into,in%20a%20competitive%20a

uction%20setting.

Macabus. (n.d.). Weighted-Average Cost of Capital (WACC).

https://macabacus.com/valuation/dcf/wacc

Muradoglu, G., Bakke, M., & Kvernes, G. L. (2005). An investment strategy based on

gearing ratio. Applied Economics Letters, 12(13), 801-804.

doi:10.1080/13504850500365780

White, D. C. (2004). Improve your project’s prospects. Chemical Processing, 67(10), 33-39.

Appendices

Appendix A – Accenture PLC

Appendix A1 – Accenture’s WACC, ROIC, Short-term debt, Long-term debt, equity (2018)

Appendix A2 – Accenture’s WACC, ROIC, Short-term debt, Long-term debt, equity (2019)

Appendix A3 – Accenture’s WACC, ROIC, Short-term debt, Long-term debt, equity (2020)

Appendix A4 – Accenture’s Cost of Equity (2020)

Appendix A5 – Accenture’s Beta (2020)

Weighted Average Cost of Capital Company: Accenture PLC Ticker: ACN US Equity

Period: 2020 A Filing Status: Most Recent

Cost of Capital Capital Structure Graph Capital Structure

Weight Cost Weight xCost Equity 97.80% 8.20% 8.00% Debt 2.20% 0.50% 0.00% Preferred Equity 0.00% 0.00% 0.00% WACC 8.00%

Market Capitalization

Short Term Debt

Long Term Debt

Millions of USD Market Capitalization 152,281.90 97.80% Short Term Debt 763.90 0.50% Long Term Debt 2,721.60 1.70% Preferred Equity 0.00 0.00% Total 155,767.40 100.00%

Historical Graph Economic Value Added

12/2010

12/2011

12/2012

12/2013

12/2014

12/2015

12/2016

12/2017

12/2018

12/2019

12/2020

WACC

Millions of USD Net Operating Profit 6,570.06 Cash Operating Taxes 1,285.08 NOPAT 5,284.98 Total Investment Capital 20,453.15 Capital Charge 1,632.90 Economic Value Added 3,652.08 ROIC 25.84% EVA Spread 17.86%

This report may not be modified or altered in any way. The BLOOMBERG PROFESSIONAL service and BLOOMBERG Data are owned and distributed locally by Bloomberg Finance LP (“BFLP”) and its subsidiaries in all jurisdictions other than Argentina, Bermuda, China, India, Japan and Korea (the (“BFLP Countries”). BFLP is a wholly-owned subsidiary of Bloomberg LP (“BLP”). BLP provides BFLP with all the global marketing and operational support and service for the Services and distributes the Services either directly or through a non-BFLP subsidiary in the BLP Countries. BFLP, BLP and their affiliates do not provide investment advice, and nothing herein shall constitute an offer of financial instruments by BFLP, BLP or their affiliates.

Bloomberg ® Weighted Average Cost of Capital 01/15/2021 04:26:04 1

Appendix A6 – Accenture’s Cost of Debt (2020)

Appendix A7 – Accenture’s Interest Coverage Ratio (2018-2020)

Financial Statement Analysis Ticker: ACN US Equity Periodicity: Annuals Currency: USD Note: Years shown on the report are Fiscal Years Company: Accenture PLC

Filing: Most Recent

GAAP Restated:2014 A Restated:2015 A Restated:2016 A Original:2017 A Restated:2018 A Original:2019 A Original:2020 A Current/LTM Estimate:2021 A Estimate:2022 A For the period ending 2014-8-31 2015-8-31 2016-8-31 2017-8-31 2018-8-31 2019-8-31 2020-8-31 2020-11-30 2021-8-31 2022-8-31 Revenue 31,874.68 32,914.42 34,797.66 36,765.48 40,992.53 43,215.01 44,327.04 44,730.27 47,789.81 51,268.39 + Sales & Services Revenue

30,002.39 31,047.93 32,882.72 34,850.18 40,992.53 43,215.01 44,327.04 44,730.27

+ Other Revenue 1,872.28 1,866.49 1,914.94 1,915.30 – Cost of Revenue 22,190.21 23,105.19 24,520.23 25,734.99 28,499.17 29,900.33 30,350.88 30,503.57 + Cost of Goods & Services

22,190.21 23,105.19 24,520.23 25,734.99 28,499.17 29,900.33 30,350.88 30,503.57

Gross Profit 9,684.47 9,809.24 10,277.43 11,030.49 12,493.36 13,314.69 13,976.16 14,226.69 15,192.86 16,234.65 + Other Operating Income

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

– Operating Expenses 5,383.95 5,373.37 5,466.98 6,397.88 6,594.59 7,009.61 7,462.51 7,589.65 + Selling, General & Admin

4,762.46 4,683.45 4,823.57 5,183.77 5,803.81 6,209.88 6,591.90 7,589.65

+ Selling & Marketing 3,582.83 3,505.05 3,580.44 3,754.31 4,196.20 4,447.46 4,625.93 4,661.98 + General & Administrative

1,179.62 1,178.40 1,243.14 1,429.46 1,607.61 1,762.42 1,965.97 2,927.66

+ Research & Development

639.51 625.54 643.41 704.32 790.78 799.73 870.61

+ Other Operating Expense

-18.02 64.38 0.00 509.79 0.00 0.00 0.00 0.00

Operating Income (Loss)

4,300.51 4,435.87 4,810.44 4,632.61 5,898.78 6,305.07 6,513.64 6,637.05 7,142.83 7,760.08

– Non-Operating (Income) Loss

2.81 25.34 -793.13 16.58 90.69 53.28 -260.69 -323.50

+ Interest Expense, Net

-12.75 -19.41 -14.23 -22.40 -36.80 -64.55 -36.26 -16.15

+ Interest Expense 17.62 14.58 16.26 15.55 19.54 22.96 33.07 36.45 – Interest Income 30.37 33.99 30.48 37.94 56.34 87.51 69.33 52.60 + Foreign Exch (Gain) Loss

0.00 0.00 0.00 0.00 0.00 0.00 0.00

+ (Income) Loss from Affiliates

0.00

+ Other Non-Op (Income) Loss

15.56 44.75 -778.90 38.97 127.48 117.82 -224.43 -307.35

Pretax Income 4,297.70 4,410.53 5,603.57 4,616.03 5,808.09 6,251.80 6,774.33 6,960.55 7,111.79 7,721.40 – Income Tax Expense (Benefit)

1,121.74 1,136.74 1,253.97 981.10 1,593.50 1,405.56 1,589.02 1,628.35

+ Current Income Tax

1,195.84 1,595.85 1,188.03 1,345.23 1,499.50 1,501.92 1,418.07

+ Deferred Income Tax

-74.09 -459.11 65.94 -364.13 94.00 -96.36 170.95

+ Tax Allowance/ Credit

0.00

Income (Loss) from Cont Ops

3,175.96 3,273.79 4,349.60 3,634.93 4,214.59 4,846.24 5,185.31 5,332.20 5,306.08 5,754.68

– Net Extraordinary Losses (Gains)

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

+ Discontinued Operations

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

+ XO & Accounting Changes

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Income (Loss) Incl. MI 3,175.96 3,273.79 4,349.60 3,634.93 4,214.59 4,846.24 5,185.31 5,332.20 – Minority Interest 234.46 220.21 237.71 189.78 154.69 67.13 77.47 81.05

Bloomberg ® 01/15/2021 04:14:04 1

Appendix A8 – Accenture’s Total Equity (Book Value WACC) (2020)

Appendix B – Capgemini SE

Appendix B1 – Capgemini’s WACC, ROIC, Short-term debt, Long-term debt, equity (2018)

Appendix B2 – Capgemini’s WACC, ROIC, Short-term debt, Long-term debt, equity (2019)

Appendix B3 – Capgemini’s WACC, ROIC, Short-term debt, Long-term debt, equity (2020)

Appendix B4 – Capgemini’s Interest Coverage Ratio (2018-2020)

Capgemini’s Interest expense 2020

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