Intrinsic value of Open Text Corporation - OTEX

Previous Close

$47.35

  Intrinsic Value

$93.43

stock screener

  Rating & Target

str. buy

+97%

Previous close

$47.35

 
Intrinsic value

$93.43

 
Up/down potential

+97%

 
Rating

str. buy

We calculate the intrinsic value of OTEX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 12.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  30.40
  27.86
  25.57
  23.52
  21.66
  20.00
  18.50
  17.15
  15.93
  14.84
  13.86
  12.97
  12.17
  11.46
  10.81
  10.23
  9.71
  9.24
  8.81
  8.43
  8.09
  7.78
  7.50
  7.25
  7.03
  6.82
  6.64
  6.48
  6.33
  6.20
Revenue, $m
  4,036
  5,160
  6,480
  8,004
  9,738
  11,685
  13,847
  16,221
  18,806
  21,597
  24,590
  27,779
  31,161
  34,731
  38,485
  42,422
  46,540
  50,839
  55,319
  59,983
  64,834
  69,878
  75,120
  80,567
  86,227
  92,111
  98,228
  104,590
  111,210
  118,101
Variable operating expenses, $m
  3,080
  3,810
  4,666
  5,655
  6,780
  8,044
  9,446
  10,987
  12,664
  14,475
  15,955
  18,025
  20,219
  22,535
  24,972
  27,526
  30,198
  32,987
  35,894
  38,920
  42,068
  45,341
  48,742
  52,276
  55,949
  59,767
  63,736
  67,864
  72,159
  76,631
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  3,080
  3,810
  4,666
  5,655
  6,780
  8,044
  9,446
  10,987
  12,664
  14,475
  15,955
  18,025
  20,219
  22,535
  24,972
  27,526
  30,198
  32,987
  35,894
  38,920
  42,068
  45,341
  48,742
  52,276
  55,949
  59,767
  63,736
  67,864
  72,159
  76,631
Operating income, $m
  956
  1,350
  1,814
  2,349
  2,958
  3,642
  4,401
  5,234
  6,142
  7,122
  8,635
  9,754
  10,942
  12,196
  13,514
  14,896
  16,342
  17,852
  19,425
  21,063
  22,766
  24,537
  26,378
  28,290
  30,278
  32,344
  34,492
  36,726
  39,051
  41,471
EBITDA, $m
  1,603
  2,049
  2,573
  3,179
  3,867
  4,641
  5,499
  6,442
  7,469
  8,577
  9,766
  11,032
  12,375
  13,793
  15,284
  16,848
  18,483
  20,190
  21,969
  23,822
  25,748
  27,752
  29,833
  31,997
  34,245
  36,581
  39,011
  41,537
  44,166
  46,903
Interest expense (income), $m
  156
  158
  233
  324
  430
  552
  692
  848
  1,022
  1,213
  1,421
  1,645
  1,886
  2,143
  2,415
  2,702
  3,004
  3,320
  3,651
  3,997
  4,357
  4,732
  5,122
  5,528
  5,949
  6,387
  6,843
  7,316
  7,808
  8,319
  8,852
Earnings before tax, $m
  798
  1,117
  1,490
  1,919
  2,405
  2,950
  3,552
  4,212
  4,929
  5,701
  6,989
  7,868
  8,799
  9,781
  10,812
  11,893
  13,022
  14,200
  15,428
  16,705
  18,034
  19,415
  20,850
  22,341
  23,891
  25,502
  27,176
  28,919
  30,731
  32,619
Tax expense, $m
  215
  302
  402
  518
  649
  796
  959
  1,137
  1,331
  1,539
  1,887
  2,124
  2,376
  2,641
  2,919
  3,211
  3,516
  3,834
  4,166
  4,510
  4,869
  5,242
  5,629
  6,032
  6,450
  6,885
  7,338
  7,808
  8,297
  8,807
Net income, $m
  582
  815
  1,088
  1,401
  1,756
  2,153
  2,593
  3,075
  3,598
  4,162
  5,102
  5,744
  6,424
  7,140
  7,893
  8,682
  9,506
  10,366
  11,262
  12,195
  13,165
  14,173
  15,220
  16,309
  17,440
  18,616
  19,839
  21,111
  22,434
  23,812

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  12,380
  15,829
  19,877
  24,552
  29,871
  35,844
  42,475
  49,759
  57,688
  66,249
  75,428
  85,212
  95,586
  106,536
  118,054
  130,130
  142,761
  155,947
  169,689
  183,996
  198,878
  214,349
  230,428
  247,137
  264,501
  282,549
  301,313
  320,829
  341,136
  362,274
Adjusted assets (=assets-cash), $m
  12,380
  15,829
  19,877
  24,552
  29,871
  35,844
  42,475
  49,759
  57,688
  66,249
  75,428
  85,212
  95,586
  106,536
  118,054
  130,130
  142,761
  155,947
  169,689
  183,996
  198,878
  214,349
  230,428
  247,137
  264,501
  282,549
  301,313
  320,829
  341,136
  362,274
Revenue / Adjusted assets
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
Average production assets, $m
  2,228
  2,848
  3,577
  4,418
  5,375
  6,450
  7,643
  8,954
  10,381
  11,922
  13,574
  15,334
  17,201
  19,171
  21,244
  23,417
  25,690
  28,063
  30,536
  33,110
  35,788
  38,573
  41,466
  44,473
  47,597
  50,845
  54,222
  57,734
  61,388
  65,192
Working capital, $m
  -678
  -867
  -1,089
  -1,345
  -1,636
  -1,963
  -2,326
  -2,725
  -3,159
  -3,628
  -4,131
  -4,667
  -5,235
  -5,835
  -6,466
  -7,127
  -7,819
  -8,541
  -9,294
  -10,077
  -10,892
  -11,739
  -12,620
  -13,535
  -14,486
  -15,475
  -16,502
  -17,571
  -18,683
  -19,841
Total debt, $m
  4,761
  6,607
  8,772
  11,273
  14,119
  17,315
  20,862
  24,759
  29,001
  33,581
  38,492
  43,726
  49,276
  55,135
  61,297
  67,758
  74,515
  81,569
  88,922
  96,576
  104,538
  112,815
  121,417
  130,356
  139,646
  149,302
  159,341
  169,782
  180,646
  191,954
Total liabilities, $m
  6,623
  8,469
  10,634
  13,135
  15,981
  19,177
  22,724
  26,621
  30,863
  35,443
  40,354
  45,588
  51,138
  56,997
  63,159
  69,620
  76,377
  83,431
  90,784
  98,438
  106,400
  114,677
  123,279
  132,218
  141,508
  151,164
  161,203
  171,644
  182,508
  193,816
Total equity, $m
  5,757
  7,361
  9,243
  11,417
  13,890
  16,668
  19,751
  23,138
  26,825
  30,806
  35,074
  39,624
  44,447
  49,539
  54,895
  60,510
  66,384
  72,515
  78,906
  85,558
  92,478
  99,672
  107,149
  114,919
  122,993
  131,385
  140,111
  149,186
  158,628
  168,457
Total liabilities and equity, $m
  12,380
  15,830
  19,877
  24,552
  29,871
  35,845
  42,475
  49,759
  57,688
  66,249
  75,428
  85,212
  95,585
  106,536
  118,054
  130,130
  142,761
  155,946
  169,690
  183,996
  198,878
  214,349
  230,428
  247,137
  264,501
  282,549
  301,314
  320,830
  341,136
  362,273
Debt-to-equity ratio
  0.830
  0.900
  0.950
  0.990
  1.020
  1.040
  1.060
  1.070
  1.080
  1.090
  1.100
  1.100
  1.110
  1.110
  1.120
  1.120
  1.120
  1.120
  1.130
  1.130
  1.130
  1.130
  1.130
  1.130
  1.140
  1.140
  1.140
  1.140
  1.140
  1.140
Adjusted equity ratio
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  582
  815
  1,088
  1,401
  1,756
  2,153
  2,593
  3,075
  3,598
  4,162
  5,102
  5,744
  6,424
  7,140
  7,893
  8,682
  9,506
  10,366
  11,262
  12,195
  13,165
  14,173
  15,220
  16,309
  17,440
  18,616
  19,839
  21,111
  22,434
  23,812
Depreciation, amort., depletion, $m
  647
  699
  760
  830
  910
  999
  1,099
  1,208
  1,327
  1,455
  1,131
  1,278
  1,433
  1,598
  1,770
  1,951
  2,141
  2,339
  2,545
  2,759
  2,982
  3,214
  3,455
  3,706
  3,966
  4,237
  4,518
  4,811
  5,116
  5,433
Funds from operations, $m
  1,229
  1,514
  1,847
  2,231
  2,665
  3,152
  3,692
  4,283
  4,925
  5,617
  6,233
  7,022
  7,857
  8,738
  9,663
  10,633
  11,647
  12,705
  13,807
  14,954
  16,147
  17,387
  18,676
  20,015
  21,407
  22,853
  24,357
  25,922
  27,550
  29,244
Change in working capital, $m
  -158
  -189
  -222
  -256
  -291
  -327
  -363
  -399
  -434
  -469
  -503
  -536
  -568
  -600
  -631
  -661
  -692
  -722
  -753
  -784
  -815
  -847
  -881
  -915
  -951
  -988
  -1,028
  -1,069
  -1,112
  -1,158
Cash from operations, $m
  1,388
  1,703
  2,069
  2,487
  2,957
  3,480
  4,055
  4,682
  5,359
  6,086
  6,736
  7,558
  8,425
  9,337
  10,294
  11,295
  12,339
  13,427
  14,560
  15,738
  16,962
  18,235
  19,556
  20,930
  22,358
  23,842
  25,385
  26,991
  28,662
  30,402
Maintenance CAPEX, $m
  -142
  -186
  -237
  -298
  -368
  -448
  -538
  -637
  -746
  -865
  -993
  -1,131
  -1,278
  -1,433
  -1,598
  -1,770
  -1,951
  -2,141
  -2,339
  -2,545
  -2,759
  -2,982
  -3,214
  -3,455
  -3,706
  -3,966
  -4,237
  -4,518
  -4,811
  -5,116
New CAPEX, $m
  -519
  -621
  -728
  -841
  -957
  -1,075
  -1,193
  -1,311
  -1,427
  -1,541
  -1,652
  -1,761
  -1,867
  -1,971
  -2,073
  -2,173
  -2,273
  -2,373
  -2,473
  -2,575
  -2,678
  -2,784
  -2,893
  -3,007
  -3,125
  -3,248
  -3,377
  -3,512
  -3,654
  -3,804
Cash from investing activities, $m
  -661
  -807
  -965
  -1,139
  -1,325
  -1,523
  -1,731
  -1,948
  -2,173
  -2,406
  -2,645
  -2,892
  -3,145
  -3,404
  -3,671
  -3,943
  -4,224
  -4,514
  -4,812
  -5,120
  -5,437
  -5,766
  -6,107
  -6,462
  -6,831
  -7,214
  -7,614
  -8,030
  -8,465
  -8,920
Free cash flow, $m
  726
  897
  1,103
  1,347
  1,631
  1,957
  2,324
  2,734
  3,186
  3,680
  4,091
  4,666
  5,281
  5,933
  6,624
  7,351
  8,114
  8,913
  9,748
  10,619
  11,525
  12,468
  13,449
  14,468
  15,527
  16,627
  17,771
  18,960
  20,196
  21,483
Issuance/(repayment) of debt, $m
  1,536
  1,845
  2,166
  2,501
  2,846
  3,196
  3,547
  3,897
  4,242
  4,580
  4,911
  5,234
  5,550
  5,859
  6,162
  6,461
  6,758
  7,054
  7,352
  7,654
  7,962
  8,277
  8,602
  8,939
  9,290
  9,656
  10,039
  10,441
  10,864
  11,309
Issuance/(repurchase) of shares, $m
  753
  788
  795
  773
  717
  624
  490
  312
  89
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,289
  2,633
  2,961
  3,274
  3,563
  3,820
  4,037
  4,209
  4,331
  4,580
  4,911
  5,234
  5,550
  5,859
  6,162
  6,461
  6,758
  7,054
  7,352
  7,654
  7,962
  8,277
  8,602
  8,939
  9,290
  9,656
  10,039
  10,441
  10,864
  11,309
Total cash flow (excl. dividends), $m
  3,016
  3,531
  4,064
  4,621
  5,195
  5,777
  6,362
  6,943
  7,517
  8,260
  9,002
  9,900
  10,830
  11,792
  12,786
  13,812
  14,872
  15,968
  17,100
  18,273
  19,487
  20,745
  22,051
  23,407
  24,817
  26,283
  27,810
  29,401
  31,060
  32,791
Retained Cash Flow (-), $m
  -1,336
  -1,604
  -1,882
  -2,174
  -2,473
  -2,778
  -3,083
  -3,387
  -3,687
  -3,981
  -4,269
  -4,549
  -4,824
  -5,092
  -5,356
  -5,616
  -5,874
  -6,131
  -6,390
  -6,653
  -6,920
  -7,194
  -7,477
  -7,770
  -8,074
  -8,392
  -8,725
  -9,075
  -9,442
  -9,829
Prev. year cash balance distribution, $m
  352
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  2,032
  1,927
  2,181
  2,447
  2,721
  2,999
  3,278
  3,556
  3,830
  4,279
  4,733
  5,351
  6,007
  6,700
  7,430
  8,196
  8,999
  9,836
  10,710
  11,620
  12,567
  13,551
  14,574
  15,637
  16,742
  17,891
  19,085
  20,326
  21,618
  22,962
Discount rate, %
  6.50
  6.83
  7.17
  7.52
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
PV of cash for distribution, $m
  1,908
  1,688
  1,772
  1,831
  1,861
  1,859
  1,827
  1,766
  1,678
  1,637
  1,564
  1,510
  1,430
  1,328
  1,209
  1,079
  943
  808
  677
  555
  445
  348
  266
  198
  144
  101
  70
  46
  30
  19
Current shareholders' claim on cash, %
  93.9
  89.3
  85.8
  83.1
  81.2
  79.8
  78.9
  78.5
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3

Open Text Corporation provides a platform and suite of software products and services that assist organizations in finding, utilizing, and sharing business information from any device. The Company designs, develops, markets and sells Enterprise Information Management (EIM) software and solutions. Its EIM offerings include Enterprise Content Management (ECM), Business Process Management (BPM), Customer Experience Management (CEM), Business Network, Discovery and Analytics. Its software and services allow organizations to manage the information that flows into, out of, and throughout the enterprise as part of daily operations. Its solutions incorporate collaborative and mobile technologies and are delivered for on-premises deployment, as well as through cloud, hybrid and managed hosted services models. In addition, the Company provides solutions that facilitate the exchange of information and transactions that occur between supply chain participants.

FINANCIAL RATIOS  of  Open Text Corporation (OTEX)

Valuation Ratios
P/E Ratio 9
Price to Sales 4
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 21.1
Price to Free Cash Flow 25.8
Growth Rates
Sales Growth Rate 25.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 13.7%
Cap. Spend. - 3 Yr. Gr. Rate 13.6%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 67.6%
Total Debt to Equity 72.7%
Interest Coverage 11
Management Effectiveness
Return On Assets 17.9%
Ret/ On Assets - 3 Yr. Avg. 10.6%
Return On Total Capital 20.1%
Ret/ On T. Cap. - 3 Yr. Avg. 11.7%
Return On Equity 37.2%
Return On Equity - 3 Yr. Avg. 21.9%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 66.7%
Gross Margin - 3 Yr. Avg. 67.6%
EBITDA Margin 69.3%
EBITDA Margin - 3 Yr. Avg. 43.9%
Operating Margin 53.6%
Oper. Margin - 3 Yr. Avg. 30.9%
Pre-Tax Margin 49.1%
Pre-Tax Margin - 3 Yr. Avg. 26.5%
Net Profit Margin 44.8%
Net Profit Margin - 3 Yr. Avg. 24.3%
Effective Tax Rate 8.9%
Eff/ Tax Rate - 3 Yr. Avg. 7.6%
Payout Ratio 11.8%

OTEX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OTEX stock intrinsic value calculation we used $3095 million for the last fiscal year's total revenue generated by Open Text Corporation. The default revenue input number comes from 2017 income statement of Open Text Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our OTEX stock valuation model: a) initial revenue growth rate of 30.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.5%, whose default value for OTEX is calculated based on our internal credit rating of Open Text Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Open Text Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of OTEX stock the variable cost ratio is equal to 79.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for OTEX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.9% for Open Text Corporation.

Corporate tax rate of 27% is the nominal tax rate for Open Text Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the OTEX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for OTEX are equal to 55.2%.

Life of production assets of 12 years is the average useful life of capital assets used in Open Text Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for OTEX is equal to -16.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4773 million for Open Text Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 265.265 million for Open Text Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Open Text Corporation at the current share price and the inputted number of shares is $12.6 billion.

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