Intrinsic value of AU Optronics Corp - AUO

Previous Close

$2.82

  Intrinsic Value

$77.83

stock screener

  Rating & Target

str. buy

+999%

Previous close

$2.82

 
Intrinsic value

$77.83

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of AUO 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 2.7

 

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, %
  12.50
  11.75
  11.08
  10.47
  9.92
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.35
  7.12
  6.91
  6.72
  6.54
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.44
  5.39
  5.35
Revenue, $m
  12,913
  14,430
  16,028
  17,706
  19,462
  21,297
  23,211
  25,204
  27,278
  29,435
  31,676
  34,006
  36,426
  38,942
  41,557
  44,277
  47,106
  50,051
  53,117
  56,311
  59,640
  63,111
  66,733
  70,513
  74,460
  78,584
  82,894
  87,400
  92,114
  97,045
Variable operating expenses, $m
  3,421
  3,822
  4,245
  4,689
  5,153
  5,638
  6,144
  6,672
  7,220
  7,790
  8,377
  8,993
  9,633
  10,298
  10,990
  11,709
  12,457
  13,236
  14,046
  14,891
  15,771
  16,689
  17,647
  18,647
  19,690
  20,781
  21,921
  23,112
  24,359
  25,663
Fixed operating expenses, $m
  7,434
  7,598
  7,765
  7,936
  8,110
  8,289
  8,471
  8,657
  8,848
  9,042
  9,241
  9,445
  9,652
  9,865
  10,082
  10,304
  10,530
  10,762
  10,999
  11,241
  11,488
  11,741
  11,999
  12,263
  12,533
  12,808
  13,090
  13,378
  13,673
  13,973
Total operating expenses, $m
  10,855
  11,420
  12,010
  12,625
  13,263
  13,927
  14,615
  15,329
  16,068
  16,832
  17,618
  18,438
  19,285
  20,163
  21,072
  22,013
  22,987
  23,998
  25,045
  26,132
  27,259
  28,430
  29,646
  30,910
  32,223
  33,589
  35,011
  36,490
  38,032
  39,636
Operating income, $m
  2,058
  3,010
  4,018
  5,082
  6,199
  7,371
  8,596
  9,876
  11,211
  12,602
  14,059
  15,569
  17,141
  18,779
  20,486
  22,265
  24,119
  26,053
  28,072
  30,179
  32,380
  34,681
  37,087
  39,603
  42,237
  44,995
  47,883
  50,910
  54,082
  57,409
EBITDA, $m
  3,428
  4,541
  5,719
  6,959
  8,262
  9,627
  11,055
  12,545
  14,100
  15,719
  17,406
  19,162
  20,990
  22,894
  24,877
  26,943
  29,097
  31,342
  33,684
  36,129
  38,682
  41,350
  44,138
  47,054
  50,105
  53,299
  56,642
  60,145
  63,816
  67,663
Interest expense (income), $m
  68
  207
  259
  314
  372
  432
  495
  561
  630
  702
  777
  855
  936
  1,020
  1,107
  1,197
  1,292
  1,390
  1,492
  1,598
  1,708
  1,823
  1,943
  2,069
  2,199
  2,335
  2,478
  2,626
  2,782
  2,944
  3,114
Earnings before tax, $m
  1,850
  2,751
  3,705
  4,710
  5,767
  6,875
  8,034
  9,245
  10,508
  11,825
  13,204
  14,633
  16,122
  17,673
  19,289
  20,973
  22,729
  24,562
  26,474
  28,471
  30,557
  32,738
  35,018
  37,404
  39,902
  42,517
  45,257
  48,128
  51,138
  54,295
Tax expense, $m
  500
  743
  1,000
  1,272
  1,557
  1,856
  2,169
  2,496
  2,837
  3,193
  3,565
  3,951
  4,353
  4,772
  5,208
  5,663
  6,137
  6,632
  7,148
  7,687
  8,250
  8,839
  9,455
  10,099
  10,773
  11,480
  12,219
  12,995
  13,807
  14,660
Net income, $m
  1,351
  2,008
  2,704
  3,438
  4,210
  5,019
  5,865
  6,749
  7,671
  8,632
  9,639
  10,682
  11,769
  12,901
  14,081
  15,310
  16,592
  17,930
  19,326
  20,784
  22,307
  23,898
  25,563
  27,305
  29,128
  31,037
  33,038
  35,134
  37,331
  39,635

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
  16,021
  17,903
  19,886
  21,968
  24,147
  26,424
  28,798
  31,271
  33,844
  36,520
  39,301
  42,191
  45,194
  48,315
  51,560
  54,934
  58,444
  62,098
  65,901
  69,864
  73,994
  78,301
  82,795
  87,485
  92,383
  97,499
  102,846
  108,437
  114,285
  120,403
Adjusted assets (=assets-cash), $m
  16,021
  17,903
  19,886
  21,968
  24,147
  26,424
  28,798
  31,271
  33,844
  36,520
  39,301
  42,191
  45,194
  48,315
  51,560
  54,934
  58,444
  62,098
  65,901
  69,864
  73,994
  78,301
  82,795
  87,485
  92,383
  97,499
  102,846
  108,437
  114,285
  120,403
Revenue / Adjusted assets
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
Average production assets, $m
  8,187
  9,149
  10,162
  11,226
  12,339
  13,503
  14,716
  15,980
  17,294
  18,662
  20,083
  21,560
  23,094
  24,689
  26,347
  28,072
  29,865
  31,732
  33,676
  35,701
  37,811
  40,012
  42,308
  44,705
  47,208
  49,822
  52,555
  55,412
  58,400
  61,526
Working capital, $m
  -917
  -1,025
  -1,138
  -1,257
  -1,382
  -1,512
  -1,648
  -1,790
  -1,937
  -2,090
  -2,249
  -2,414
  -2,586
  -2,765
  -2,951
  -3,144
  -3,345
  -3,554
  -3,771
  -3,998
  -4,234
  -4,481
  -4,738
  -5,006
  -5,287
  -5,579
  -5,885
  -6,205
  -6,540
  -6,890
Total debt, $m
  4,800
  5,813
  6,880
  8,000
  9,172
  10,397
  11,675
  13,005
  14,389
  15,829
  17,325
  18,880
  20,496
  22,175
  23,920
  25,736
  27,624
  29,590
  31,636
  33,768
  35,990
  38,307
  40,725
  43,248
  45,883
  48,636
  51,513
  54,520
  57,666
  60,958
Total liabilities, $m
  8,619
  9,632
  10,699
  11,819
  12,991
  14,216
  15,493
  16,824
  18,208
  19,648
  21,144
  22,699
  24,314
  25,994
  27,739
  29,555
  31,443
  33,408
  35,455
  37,587
  39,809
  42,126
  44,544
  47,067
  49,702
  52,454
  55,331
  58,339
  61,485
  64,777
Total equity, $m
  7,402
  8,271
  9,187
  10,149
  11,156
  12,208
  13,305
  14,447
  15,636
  16,872
  18,157
  19,492
  20,880
  22,322
  23,821
  25,380
  27,001
  28,689
  30,446
  32,277
  34,185
  36,175
  38,251
  40,418
  42,681
  45,045
  47,515
  50,098
  52,800
  55,626
Total liabilities and equity, $m
  16,021
  17,903
  19,886
  21,968
  24,147
  26,424
  28,798
  31,271
  33,844
  36,520
  39,301
  42,191
  45,194
  48,316
  51,560
  54,935
  58,444
  62,097
  65,901
  69,864
  73,994
  78,301
  82,795
  87,485
  92,383
  97,499
  102,846
  108,437
  114,285
  120,403
Debt-to-equity ratio
  0.650
  0.700
  0.750
  0.790
  0.820
  0.850
  0.880
  0.900
  0.920
  0.940
  0.950
  0.970
  0.980
  0.990
  1.000
  1.010
  1.020
  1.030
  1.040
  1.050
  1.050
  1.060
  1.060
  1.070
  1.080
  1.080
  1.080
  1.090
  1.090
  1.100
Adjusted equity ratio
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,351
  2,008
  2,704
  3,438
  4,210
  5,019
  5,865
  6,749
  7,671
  8,632
  9,639
  10,682
  11,769
  12,901
  14,081
  15,310
  16,592
  17,930
  19,326
  20,784
  22,307
  23,898
  25,563
  27,305
  29,128
  31,037
  33,038
  35,134
  37,331
  39,635
Depreciation, amort., depletion, $m
  1,371
  1,531
  1,700
  1,877
  2,063
  2,257
  2,459
  2,670
  2,889
  3,117
  3,347
  3,593
  3,849
  4,115
  4,391
  4,679
  4,978
  5,289
  5,613
  5,950
  6,302
  6,669
  7,051
  7,451
  7,868
  8,304
  8,759
  9,235
  9,733
  10,254
Funds from operations, $m
  2,722
  3,539
  4,404
  5,316
  6,273
  7,276
  8,324
  9,419
  10,560
  11,749
  12,986
  14,275
  15,618
  17,016
  18,472
  19,989
  21,570
  23,219
  24,939
  26,734
  28,608
  30,567
  32,615
  34,756
  36,996
  39,341
  41,797
  44,369
  47,064
  49,889
Change in working capital, $m
  -102
  -108
  -113
  -119
  -125
  -130
  -136
  -142
  -147
  -153
  -159
  -165
  -172
  -179
  -186
  -193
  -201
  -209
  -218
  -227
  -236
  -246
  -257
  -268
  -280
  -293
  -306
  -320
  -335
  -350
Cash from operations, $m
  2,824
  3,647
  4,518
  5,435
  6,398
  7,406
  8,460
  9,560
  10,707
  11,902
  13,145
  14,441
  15,790
  17,195
  18,658
  20,182
  21,771
  23,428
  25,156
  26,961
  28,845
  30,814
  32,872
  35,024
  37,277
  39,634
  42,103
  44,689
  47,399
  50,240
Maintenance CAPEX, $m
  -1,212
  -1,364
  -1,525
  -1,694
  -1,871
  -2,057
  -2,250
  -2,453
  -2,663
  -2,882
  -3,110
  -3,347
  -3,593
  -3,849
  -4,115
  -4,391
  -4,679
  -4,978
  -5,289
  -5,613
  -5,950
  -6,302
  -6,669
  -7,051
  -7,451
  -7,868
  -8,304
  -8,759
  -9,235
  -9,733
New CAPEX, $m
  -914
  -962
  -1,013
  -1,064
  -1,114
  -1,163
  -1,213
  -1,264
  -1,315
  -1,367
  -1,421
  -1,477
  -1,535
  -1,595
  -1,658
  -1,724
  -1,794
  -1,867
  -1,944
  -2,025
  -2,111
  -2,201
  -2,296
  -2,397
  -2,503
  -2,615
  -2,733
  -2,857
  -2,988
  -3,126
Cash from investing activities, $m
  -2,126
  -2,326
  -2,538
  -2,758
  -2,985
  -3,220
  -3,463
  -3,717
  -3,978
  -4,249
  -4,531
  -4,824
  -5,128
  -5,444
  -5,773
  -6,115
  -6,473
  -6,845
  -7,233
  -7,638
  -8,061
  -8,503
  -8,965
  -9,448
  -9,954
  -10,483
  -11,037
  -11,616
  -12,223
  -12,859
Free cash flow, $m
  698
  1,321
  1,980
  2,678
  3,413
  4,186
  4,996
  5,844
  6,729
  7,653
  8,614
  9,617
  10,662
  11,750
  12,885
  14,067
  15,298
  16,583
  17,924
  19,323
  20,784
  22,311
  23,907
  25,576
  27,323
  29,151
  31,066
  33,073
  35,175
  37,380
Issuance/(repayment) of debt, $m
  962
  1,013
  1,067
  1,120
  1,172
  1,225
  1,277
  1,330
  1,384
  1,439
  1,496
  1,555
  1,616
  1,679
  1,746
  1,815
  1,888
  1,965
  2,047
  2,132
  2,222
  2,317
  2,417
  2,523
  2,635
  2,753
  2,877
  3,008
  3,146
  3,291
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  
  962
  1,013
  1,067
  1,120
  1,172
  1,225
  1,277
  1,330
  1,384
  1,439
  1,496
  1,555
  1,616
  1,679
  1,746
  1,815
  1,888
  1,965
  2,047
  2,132
  2,222
  2,317
  2,417
  2,523
  2,635
  2,753
  2,877
  3,008
  3,146
  3,291
Total cash flow (excl. dividends), $m
  1,660
  2,333
  3,047
  3,797
  4,586
  5,411
  6,274
  7,174
  8,113
  9,092
  10,110
  11,172
  12,278
  13,430
  14,630
  15,882
  17,187
  18,549
  19,970
  21,455
  23,006
  24,628
  26,324
  28,099
  29,958
  31,904
  33,943
  36,081
  38,321
  40,671
Retained Cash Flow (-), $m
  -813
  -870
  -916
  -962
  -1,007
  -1,052
  -1,097
  -1,143
  -1,189
  -1,236
  -1,285
  -1,335
  -1,387
  -1,442
  -1,499
  -1,559
  -1,622
  -1,688
  -1,757
  -1,831
  -1,908
  -1,990
  -2,076
  -2,167
  -2,263
  -2,364
  -2,471
  -2,583
  -2,702
  -2,826
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
  847
  1,464
  2,131
  2,836
  3,579
  4,359
  5,177
  6,032
  6,925
  7,856
  8,825
  9,836
  10,890
  11,988
  13,131
  14,323
  15,565
  16,861
  18,213
  19,624
  21,098
  22,638
  24,248
  25,933
  27,695
  29,540
  31,473
  33,498
  35,620
  37,845
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  812
  1,340
  1,854
  2,335
  2,774
  3,164
  3,497
  3,770
  3,978
  4,119
  4,191
  4,198
  4,141
  4,024
  3,855
  3,640
  3,387
  3,105
  2,804
  2,494
  2,182
  1,878
  1,589
  1,321
  1,077
  862
  675
  518
  389
  285
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

AU Optronics Corp. is a thin-film-transistor liquid-crystal display (TFT-LCD) panel provider. The Company operates in two business segments: display business and solar business. Through Display business segment, the Company designs, develops, manufactures, assembles and markets flat panel displays and most of its products are TFT-LCD panels. Its panels are primarily used in televisions, monitors, mobile personal computers (PCs), mobile devices and commercial and other applications (such as displays for automobiles, industrial PCs, automated teller machines, point of sale terminals and pachinko machines). Through Solar business segment, the Company is capable of manufacturing upstream and midstream products, such as ingots, solar wafers and solar cells. Through the Company's subsidiaries AUO Crystal Corp. and M.Setek Co., Ltd. (M.Setek), it mainly focuses on research, production and sales of solar materials, such as ingots and solar wafers.

FINANCIAL RATIOS  of  AU Optronics Corp (AUO)

Valuation Ratios
P/E Ratio 108.1
Price to Sales 2.6
Price to Book 4.7
Price to Tangible Book
Price to Cash Flow 23
Price to Free Cash Flow -88.7
Growth Rates
Sales Growth Rate -8.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 38.2%
Cap. Spend. - 3 Yr. Gr. Rate 12.7%
Financial Strength
Quick Ratio 4
Current Ratio 0.1
LT Debt to Equity 58.6%
Total Debt to Equity 68.9%
Interest Coverage 6
Management Effectiveness
Return On Assets 2.1%
Ret/ On Assets - 3 Yr. Avg. 2.6%
Return On Total Capital 2.6%
Ret/ On T. Cap. - 3 Yr. Avg. 3.2%
Return On Equity 4.3%
Return On Equity - 3 Yr. Avg. 6.1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 10.5%
Gross Margin - 3 Yr. Avg. 11.1%
EBITDA Margin 16.1%
EBITDA Margin - 3 Yr. Avg. 17.3%
Operating Margin 3.4%
Oper. Margin - 3 Yr. Avg. 3.3%
Pre-Tax Margin 3.4%
Pre-Tax Margin - 3 Yr. Avg. 3.5%
Net Profit Margin 2.4%
Net Profit Margin - 3 Yr. Avg. 2.6%
Effective Tax Rate 41.1%
Eff/ Tax Rate - 3 Yr. Avg. 31.1%
Payout Ratio 43%

AUO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AUO stock intrinsic value calculation we used $11478 million for the last fiscal year's total revenue generated by AU Optronics Corp. The default revenue input number comes from 0001 income statement of AU Optronics Corp. 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 AUO stock valuation model: a) initial revenue growth rate of 12.5% 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 4.3%, whose default value for AUO is calculated based on our internal credit rating of AU Optronics Corp, 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 AU Optronics Corp.
    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 AUO stock the variable cost ratio is equal to 26.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7274 million in the base year in the intrinsic value calculation for AUO 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 AU Optronics Corp.

Corporate tax rate of 27% is the nominal tax rate for AU Optronics Corp. 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 AUO 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 AUO are equal to 63.4%.

Life of production assets of 6 years is the average useful life of capital assets used in AU Optronics Corp 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 AUO is equal to -7.1%. 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 - $6588.22529618 million for AU Optronics Corp - 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 961.853 million for AU Optronics Corp 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 AU Optronics Corp at the current share price and the inputted number of shares is $2.7 billion.

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