Intrinsic value of Abbott Laboratories - ABT

Previous Close

$86.62

  Intrinsic Value

$40.08

stock screener

  Rating & Target

str. sell

-54%

Previous close

$86.62

 
Intrinsic value

$40.08

 
Up/down potential

-54%

 
Rating

str. sell

We calculate the intrinsic value of ABT 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 0001), $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 152.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
  4.87
Revenue, $m
  31,281
  32,085
  32,988
  33,988
  35,085
  36,280
  37,573
  38,967
  40,462
  42,062
  43,769
  45,587
  47,519
  49,569
  51,741
  54,040
  56,472
  59,041
  61,754
  64,616
  67,635
  70,817
  74,170
  77,701
  81,418
  85,331
  89,449
  93,781
  98,338
  103,129
Variable operating expenses, $m
  10,726
  10,893
  11,081
  11,289
  11,518
  11,766
  12,035
  12,325
  12,636
  12,969
  9,104
  9,482
  9,884
  10,311
  10,762
  11,241
  11,746
  12,281
  12,845
  13,441
  14,068
  14,730
  15,428
  16,162
  16,935
  17,749
  18,606
  19,507
  20,455
  21,451
Fixed operating expenses, $m
  17,086
  17,462
  17,846
  18,238
  18,640
  19,050
  19,469
  19,897
  20,335
  20,782
  21,239
  21,707
  22,184
  22,672
  23,171
  23,681
  24,202
  24,734
  25,279
  25,835
  26,403
  26,984
  27,578
  28,184
  28,804
  29,438
  30,086
  30,747
  31,424
  32,115
Total operating expenses, $m
  27,812
  28,355
  28,927
  29,527
  30,158
  30,816
  31,504
  32,222
  32,971
  33,751
  30,343
  31,189
  32,068
  32,983
  33,933
  34,922
  35,948
  37,015
  38,124
  39,276
  40,471
  41,714
  43,006
  44,346
  45,739
  47,187
  48,692
  50,254
  51,879
  53,566
Operating income, $m
  3,469
  3,730
  4,061
  4,460
  4,928
  5,464
  6,070
  6,745
  7,491
  8,311
  13,426
  14,398
  15,450
  16,586
  17,807
  19,119
  20,523
  22,026
  23,630
  25,341
  27,164
  29,103
  31,164
  33,354
  35,679
  38,144
  40,758
  43,527
  46,459
  49,563
EBITDA, $m
  9,612
  9,922
  10,308
  10,769
  11,304
  11,914
  12,599
  13,360
  14,198
  15,116
  16,116
  17,200
  18,371
  19,632
  20,988
  22,440
  23,995
  25,655
  27,426
  29,313
  31,321
  33,456
  35,723
  38,130
  40,683
  43,389
  46,256
  49,291
  52,503
  55,902
Interest expense (income), $m
  181
  1,057
  1,104
  1,156
  1,214
  1,279
  1,349
  1,426
  1,510
  1,599
  1,696
  1,799
  1,909
  2,026
  2,151
  2,283
  2,423
  2,571
  2,727
  2,893
  3,068
  3,252
  3,447
  3,652
  3,868
  4,096
  4,335
  4,587
  4,853
  5,132
  5,425
Earnings before tax, $m
  2,413
  2,626
  2,905
  3,246
  3,649
  4,115
  4,643
  5,235
  5,892
  6,615
  11,627
  12,489
  13,424
  14,435
  15,525
  16,696
  17,953
  19,298
  20,737
  22,273
  23,911
  25,656
  27,512
  29,486
  31,583
  33,809
  36,170
  38,674
  41,327
  44,137
Tax expense, $m
  651
  709
  784
  876
  985
  1,111
  1,254
  1,414
  1,591
  1,786
  3,139
  3,372
  3,625
  3,897
  4,192
  4,508
  4,847
  5,211
  5,599
  6,014
  6,456
  6,927
  7,428
  7,961
  8,527
  9,128
  9,766
  10,442
  11,158
  11,917
Net income, $m
  1,761
  1,917
  2,121
  2,370
  2,664
  3,004
  3,390
  3,822
  4,301
  4,829
  8,488
  9,117
  9,800
  10,538
  11,333
  12,188
  13,105
  14,088
  15,138
  16,260
  17,455
  18,729
  20,084
  21,525
  23,056
  24,681
  26,404
  28,232
  30,169
  32,220

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
  68,750
  70,517
  72,501
  74,699
  77,110
  79,736
  82,579
  85,642
  88,928
  92,445
  96,196
  100,191
  104,437
  108,942
  113,716
  118,770
  124,114
  129,761
  135,723
  142,014
  148,649
  155,642
  163,010
  170,771
  178,941
  187,542
  196,591
  206,112
  216,127
  226,658
Adjusted assets (=assets-cash), $m
  68,750
  70,517
  72,501
  74,699
  77,110
  79,736
  82,579
  85,642
  88,928
  92,445
  96,196
  100,191
  104,437
  108,942
  113,716
  118,770
  124,114
  129,761
  135,723
  142,014
  148,649
  155,642
  163,010
  170,771
  178,941
  187,542
  196,591
  206,112
  216,127
  226,658
Revenue / Adjusted assets
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
Average production assets, $m
  30,186
  30,962
  31,833
  32,798
  33,857
  35,010
  36,258
  37,603
  39,046
  40,590
  42,237
  43,991
  45,856
  47,834
  49,930
  52,149
  54,495
  56,975
  59,593
  62,355
  65,268
  68,338
  71,574
  74,981
  78,569
  82,345
  86,318
  90,499
  94,896
  99,520
Working capital, $m
  1,783
  1,829
  1,880
  1,937
  2,000
  2,068
  2,142
  2,221
  2,306
  2,398
  2,495
  2,598
  2,709
  2,825
  2,949
  3,080
  3,219
  3,365
  3,520
  3,683
  3,855
  4,037
  4,228
  4,429
  4,641
  4,864
  5,099
  5,346
  5,605
  5,878
Total debt, $m
  20,446
  21,406
  22,483
  23,676
  24,986
  26,412
  27,955
  29,618
  31,403
  33,312
  35,350
  37,519
  39,824
  42,270
  44,863
  47,607
  50,509
  53,575
  56,813
  60,229
  63,831
  67,629
  71,630
  75,843
  80,280
  84,950
  89,864
  95,034
  100,472
  106,190
Total liabilities, $m
  37,331
  38,291
  39,368
  40,561
  41,871
  43,297
  44,840
  46,503
  48,288
  50,197
  52,235
  54,404
  56,709
  59,155
  61,748
  64,492
  67,394
  70,460
  73,698
  77,114
  80,716
  84,514
  88,515
  92,728
  97,165
  101,835
  106,749
  111,919
  117,357
  123,075
Total equity, $m
  31,419
  32,226
  33,133
  34,137
  35,239
  36,440
  37,739
  39,138
  40,640
  42,247
  43,962
  45,787
  47,728
  49,786
  51,968
  54,278
  56,720
  59,301
  62,025
  64,900
  67,932
  71,128
  74,496
  78,042
  81,776
  85,706
  89,842
  94,193
  98,770
  103,583
Total liabilities and equity, $m
  68,750
  70,517
  72,501
  74,698
  77,110
  79,737
  82,579
  85,641
  88,928
  92,444
  96,197
  100,191
  104,437
  108,941
  113,716
  118,770
  124,114
  129,761
  135,723
  142,014
  148,648
  155,642
  163,011
  170,770
  178,941
  187,541
  196,591
  206,112
  216,127
  226,658
Debt-to-equity ratio
  0.650
  0.660
  0.680
  0.690
  0.710
  0.720
  0.740
  0.760
  0.770
  0.790
  0.800
  0.820
  0.830
  0.850
  0.860
  0.880
  0.890
  0.900
  0.920
  0.930
  0.940
  0.950
  0.960
  0.970
  0.980
  0.990
  1.000
  1.010
  1.020
  1.030
Adjusted equity ratio
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,761
  1,917
  2,121
  2,370
  2,664
  3,004
  3,390
  3,822
  4,301
  4,829
  8,488
  9,117
  9,800
  10,538
  11,333
  12,188
  13,105
  14,088
  15,138
  16,260
  17,455
  18,729
  20,084
  21,525
  23,056
  24,681
  26,404
  28,232
  30,169
  32,220
Depreciation, amort., depletion, $m
  6,142
  6,192
  6,247
  6,309
  6,376
  6,450
  6,529
  6,615
  6,707
  6,805
  2,690
  2,802
  2,921
  3,047
  3,180
  3,322
  3,471
  3,629
  3,796
  3,972
  4,157
  4,353
  4,559
  4,776
  5,004
  5,245
  5,498
  5,764
  6,044
  6,339
Funds from operations, $m
  7,904
  8,109
  8,368
  8,678
  9,040
  9,454
  9,919
  10,436
  11,008
  11,634
  11,178
  11,919
  12,720
  13,584
  14,513
  15,510
  16,577
  17,717
  18,934
  20,231
  21,612
  23,082
  24,643
  26,301
  28,060
  29,925
  31,902
  33,996
  36,213
  38,559
Change in working capital, $m
  40
  46
  51
  57
  63
  68
  74
  79
  85
  91
  97
  104
  110
  117
  124
  131
  139
  146
  155
  163
  172
  181
  191
  201
  212
  223
  235
  247
  260
  273
Cash from operations, $m
  7,863
  8,063
  8,316
  8,621
  8,978
  9,385
  9,845
  10,357
  10,923
  11,543
  11,081
  11,815
  12,610
  13,468
  14,389
  15,379
  16,438
  17,570
  18,779
  20,068
  21,440
  22,900
  24,452
  26,100
  27,848
  29,702
  31,668
  33,749
  35,953
  38,286
Maintenance CAPEX, $m
  -1,879
  -1,923
  -1,972
  -2,028
  -2,089
  -2,157
  -2,230
  -2,309
  -2,395
  -2,487
  -2,585
  -2,690
  -2,802
  -2,921
  -3,047
  -3,180
  -3,322
  -3,471
  -3,629
  -3,796
  -3,972
  -4,157
  -4,353
  -4,559
  -4,776
  -5,004
  -5,245
  -5,498
  -5,764
  -6,044
New CAPEX, $m
  -679
  -776
  -871
  -965
  -1,059
  -1,153
  -1,248
  -1,345
  -1,443
  -1,544
  -1,647
  -1,754
  -1,864
  -1,978
  -2,096
  -2,219
  -2,347
  -2,479
  -2,618
  -2,762
  -2,913
  -3,071
  -3,235
  -3,407
  -3,588
  -3,776
  -3,974
  -4,180
  -4,397
  -4,624
Cash from investing activities, $m
  -2,558
  -2,699
  -2,843
  -2,993
  -3,148
  -3,310
  -3,478
  -3,654
  -3,838
  -4,031
  -4,232
  -4,444
  -4,666
  -4,899
  -5,143
  -5,399
  -5,669
  -5,950
  -6,247
  -6,558
  -6,885
  -7,228
  -7,588
  -7,966
  -8,364
  -8,780
  -9,219
  -9,678
  -10,161
  -10,668
Free cash flow, $m
  5,305
  5,364
  5,473
  5,629
  5,830
  6,076
  6,367
  6,703
  7,084
  7,512
  6,848
  7,371
  7,944
  8,569
  9,246
  9,979
  10,770
  11,620
  12,532
  13,510
  14,556
  15,673
  16,864
  18,133
  19,485
  20,922
  22,449
  24,071
  25,792
  27,617
Issuance/(repayment) of debt, $m
  880
  959
  1,077
  1,194
  1,310
  1,426
  1,544
  1,663
  1,785
  1,909
  2,037
  2,169
  2,305
  2,446
  2,592
  2,744
  2,902
  3,066
  3,237
  3,416
  3,603
  3,797
  4,001
  4,214
  4,437
  4,670
  4,914
  5,170
  5,438
  5,719
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  880
  959
  1,077
  1,194
  1,310
  1,426
  1,544
  1,663
  1,785
  1,909
  2,037
  2,169
  2,305
  2,446
  2,592
  2,744
  2,902
  3,066
  3,237
  3,416
  3,603
  3,797
  4,001
  4,214
  4,437
  4,670
  4,914
  5,170
  5,438
  5,719
Total cash flow (excl. dividends), $m
  6,185
  6,324
  6,550
  6,822
  7,139
  7,502
  7,910
  8,366
  8,869
  9,421
  8,885
  9,540
  10,250
  11,015
  11,839
  12,724
  13,672
  14,686
  15,770
  16,926
  18,158
  19,470
  20,865
  22,347
  23,921
  25,592
  27,363
  29,241
  31,230
  33,336
Retained Cash Flow (-), $m
  -697
  -807
  -907
  -1,004
  -1,102
  -1,200
  -1,299
  -1,400
  -1,502
  -1,607
  -1,715
  -1,826
  -1,940
  -2,059
  -2,182
  -2,310
  -2,442
  -2,581
  -2,725
  -2,875
  -3,032
  -3,196
  -3,367
  -3,547
  -3,734
  -3,930
  -4,136
  -4,351
  -4,577
  -4,813
Prev. year cash balance distribution, $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 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
  5,488
  5,516
  5,644
  5,818
  6,037
  6,302
  6,611
  6,966
  7,367
  7,815
  7,170
  7,715
  8,309
  8,956
  9,657
  10,414
  11,229
  12,106
  13,045
  14,051
  15,126
  16,274
  17,498
  18,801
  20,187
  21,661
  23,227
  24,890
  26,653
  28,523
Discount rate, %
  5.10
  5.36
  5.62
  5.90
  6.20
  6.51
  6.83
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.27
  12.89
  13.53
  14.21
  14.92
  15.66
  16.45
  17.27
  18.13
  19.04
  19.99
  20.99
PV of cash for distribution, $m
  5,222
  4,970
  4,790
  4,625
  4,469
  4,317
  4,162
  4,001
  3,831
  3,649
  2,981
  2,828
  2,659
  2,477
  2,281
  2,077
  1,867
  1,655
  1,446
  1,244
  1,053
  875
  714
  572
  449
  344
  258
  189
  135
  94
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Abbott Laboratories is engaged in the discovery, development, manufacture and sale of a range of healthcare products. The Company operates through four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products and Vascular Products. Its Established Pharmaceutical Products include a range of branded generic pharmaceuticals manufactured around the world and marketed and sold outside the United States. Its Diagnostic Products include a range of diagnostic systems and tests. Its Nutritional Products include a range of pediatric and adult nutritional products. Its Company's Vascular Products include a range of coronary, endovascular, vessel closure and structural heart devices for the treatment of vascular disease. The Company, through St. Jude Medical, Inc., also offers products, such as rhythm management products, electrophysiology products, heart failure related products, vascular products, structural heart products and neuromodulation products.

FINANCIAL RATIOS  of  Abbott Laboratories (ABT)

Valuation Ratios
P/E Ratio 91.1
Price to Sales 6.1
Price to Book 6.2
Price to Tangible Book
Price to Cash Flow 39.8
Price to Free Cash Flow 61.3
Growth Rates
Sales Growth Rate 2.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 1%
Cap. Spend. - 3 Yr. Gr. Rate -0.4%
Financial Strength
Quick Ratio 22
Current Ratio 0.1
LT Debt to Equity 100.7%
Total Debt to Equity 104.9%
Interest Coverage 9
Management Effectiveness
Return On Assets 3.3%
Ret/ On Assets - 3 Yr. Avg. 6.7%
Return On Total Capital 3.9%
Ret/ On T. Cap. - 3 Yr. Avg. 8.9%
Return On Equity 6.7%
Return On Equity - 3 Yr. Avg. 12.4%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 56.8%
Gross Margin - 3 Yr. Avg. 56.2%
EBITDA Margin 14.1%
EBITDA Margin - 3 Yr. Avg. 19.6%
Operating Margin 15.3%
Oper. Margin - 3 Yr. Avg. 14%
Pre-Tax Margin 6.8%
Pre-Tax Margin - 3 Yr. Avg. 11.6%
Net Profit Margin 6.7%
Net Profit Margin - 3 Yr. Avg. 13.2%
Effective Tax Rate 24.8%
Eff/ Tax Rate - 3 Yr. Avg. 24.8%
Payout Ratio 109.9%

ABT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ABT stock intrinsic value calculation we used $30578 million for the last fiscal year's total revenue generated by Abbott Laboratories. The default revenue input number comes from 0001 income statement of Abbott Laboratories. 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 ABT stock valuation model: a) initial revenue growth rate of 2.3% 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 5.1%, whose default value for ABT is calculated based on our internal credit rating of Abbott Laboratories, 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 Abbott Laboratories.
    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 ABT stock the variable cost ratio is equal to 34.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $16718 million in the base year in the intrinsic value calculation for ABT 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 5.4% for Abbott Laboratories.

Corporate tax rate of 27% is the nominal tax rate for Abbott Laboratories. 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 ABT 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 ABT are equal to 96.5%.

Life of production assets of 15.7 years is the average useful life of capital assets used in Abbott Laboratories 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 ABT is equal to 5.7%. 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 - $30722 million for Abbott Laboratories - 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 1756.449 million for Abbott Laboratories 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 Abbott Laboratories at the current share price and the inputted number of shares is $152.1 billion.

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