IVR2: 20 quarters of earnings and a debt adjustment
The Brazilian IVR2 formula, controller-attributable earnings, the Selic adjustment and differences from IVR.
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What changes in IVR2?
IVR2 divides an alternative valuation estimate by market capitalization. In Brazil, it uses controller-attributable equity and cumulative controller-attributable earnings over 20 quarters. The net debt adjustment uses the annual Selic rate and a debt factor.
Current Brazilian formula
Valuation 2 = controller equity + cumulative controller earnings over 20 quarters − (annual Selic rate × net debt × debt factor). IVR2 = valuation 2 ÷ market capitalization. Rates are decimals: 15% is 0.15.
The debt factor relates controller equity to the reference equity in the financial statement. For nonfinancial companies it uses (2.03 − 2.03.09) ÷ 2.03; for financial institutions, 2.07.01 ÷ 2.08. Account mappings and available debt data depend on company type.
Reproducible example
Hypothetical amounts in millions: controller equity 100, 20-quarter earnings 90, net debt 50, factor 0.80 and Selic 0.15. The debt adjustment is 6; valuation 2 is 184. With market capitalization of 125, IVR2 is 1.472.
This illustrates the formula, not a real company or the prevailing interest rate.
Availability and limitations
The Brazilian calculation requires 20 quarters and valid equity, debt, factor and Selic inputs. Failed validation can make the index unavailable. Missing data is not a buy or sell signal. This formula documents Brazilian companies; US data availability and processing differ.
References and transparency
Ranking Invest is responsible for its proprietary formulas. Use primary sources to verify financial statements; they do not endorse the indexes.