Intrinsic value of AstraZeneca ADR - AZN

Previous Close

$39.21

  Intrinsic Value

$141.30

stock screener

  Rating & Target

str. buy

+260%

Previous close

$39.21

 
Intrinsic value

$141.30

 
Up/down potential

+260%

 
Rating

str. buy

We calculate the intrinsic value of AZN 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 18.3

 

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, %
  2.00
  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
Revenue, $m
  22,914
  23,441
  24,044
  24,720
  25,470
  26,292
  27,187
  28,157
  29,201
  30,321
  31,520
  32,800
  34,162
  35,609
  37,145
  38,773
  40,496
  42,318
  44,244
  46,277
  48,422
  50,684
  53,068
  55,581
  58,227
  61,013
  63,945
  67,031
  70,277
  73,691
Variable operating expenses, $m
  17,958
  18,283
  18,655
  19,073
  19,536
  20,044
  20,597
  21,196
  21,841
  22,534
  19,473
  20,263
  21,105
  21,999
  22,948
  23,954
  25,018
  26,144
  27,333
  28,589
  29,914
  31,312
  32,785
  34,337
  35,972
  37,693
  39,505
  41,411
  43,416
  45,526
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
  17,958
  18,283
  18,655
  19,073
  19,536
  20,044
  20,597
  21,196
  21,841
  22,534
  19,473
  20,263
  21,105
  21,999
  22,948
  23,954
  25,018
  26,144
  27,333
  28,589
  29,914
  31,312
  32,785
  34,337
  35,972
  37,693
  39,505
  41,411
  43,416
  45,526
Operating income, $m
  4,957
  5,158
  5,388
  5,647
  5,933
  6,248
  6,590
  6,960
  7,360
  7,788
  12,047
  12,536
  13,057
  13,610
  14,197
  14,819
  15,478
  16,175
  16,910
  17,687
  18,507
  19,372
  20,283
  21,243
  22,255
  23,320
  24,440
  25,620
  26,861
  28,166
EBITDA, $m
  10,552
  10,794
  11,072
  11,383
  11,728
  12,107
  12,519
  12,966
  13,447
  13,963
  14,515
  15,104
  15,731
  16,398
  17,105
  17,855
  18,648
  19,487
  20,374
  21,310
  22,298
  23,339
  24,437
  25,594
  26,813
  28,096
  29,446
  30,867
  32,362
  33,934
Interest expense (income), $m
  677
  1,549
  1,629
  1,728
  1,841
  1,967
  2,108
  2,262
  2,429
  2,611
  2,806
  3,016
  3,241
  3,480
  3,735
  4,006
  4,294
  4,599
  4,921
  5,262
  5,623
  6,003
  6,405
  6,829
  7,275
  7,746
  8,241
  8,763
  9,312
  9,889
  10,497
Earnings before tax, $m
  3,408
  3,529
  3,661
  3,806
  3,966
  4,140
  4,328
  4,531
  4,749
  4,982
  9,031
  9,296
  9,577
  9,875
  10,191
  10,526
  10,879
  11,253
  11,648
  12,065
  12,504
  12,967
  13,455
  13,968
  14,509
  15,079
  15,678
  16,308
  16,971
  17,668
Tax expense, $m
  920
  953
  988
  1,028
  1,071
  1,118
  1,169
  1,223
  1,282
  1,345
  2,438
  2,510
  2,586
  2,666
  2,752
  2,842
  2,937
  3,038
  3,145
  3,257
  3,376
  3,501
  3,633
  3,771
  3,918
  4,071
  4,233
  4,403
  4,582
  4,770
Net income, $m
  2,488
  2,576
  2,672
  2,779
  2,895
  3,022
  3,160
  3,308
  3,467
  3,637
  6,593
  6,786
  6,991
  7,209
  7,440
  7,684
  7,942
  8,215
  8,503
  8,807
  9,128
  9,466
  9,822
  10,197
  10,592
  11,007
  11,445
  11,905
  12,389
  12,898

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
  64,547
  66,032
  67,729
  69,634
  71,745
  74,062
  76,584
  79,314
  82,256
  85,412
  88,790
  92,393
  96,230
  100,308
  104,635
  109,220
  114,074
  119,207
  124,630
  130,357
  136,399
  142,771
  149,488
  156,565
  164,019
  171,866
  180,127
  188,819
  197,963
  207,582
Adjusted assets (=assets-cash), $m
  64,547
  66,032
  67,729
  69,634
  71,745
  74,062
  76,584
  79,314
  82,256
  85,412
  88,790
  92,393
  96,230
  100,308
  104,635
  109,220
  114,074
  119,207
  124,630
  130,357
  136,399
  142,771
  149,488
  156,565
  164,019
  171,866
  180,127
  188,819
  197,963
  207,582
Revenue / Adjusted assets
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
Average production assets, $m
  27,085
  27,708
  28,420
  29,219
  30,105
  31,077
  32,135
  33,281
  34,515
  35,840
  37,257
  38,769
  40,379
  42,090
  43,906
  45,830
  47,867
  50,020
  52,296
  54,699
  57,234
  59,908
  62,727
  65,696
  68,824
  72,117
  75,583
  79,230
  83,067
  87,103
Working capital, $m
  -5,660
  -5,790
  -5,939
  -6,106
  -6,291
  -6,494
  -6,715
  -6,955
  -7,213
  -7,489
  -7,786
  -8,101
  -8,438
  -8,795
  -9,175
  -9,577
  -10,003
  -10,453
  -10,928
  -11,430
  -11,960
  -12,519
  -13,108
  -13,728
  -14,382
  -15,070
  -15,794
  -16,557
  -17,358
  -18,202
Total debt, $m
  18,727
  19,861
  21,158
  22,613
  24,226
  25,996
  27,923
  30,009
  32,256
  34,668
  37,248
  40,001
  42,933
  46,048
  49,354
  52,857
  56,565
  60,487
  64,631
  69,006
  73,622
  78,490
  83,622
  89,029
  94,723
  100,719
  107,030
  113,671
  120,657
  128,005
Total liabilities, $m
  49,314
  50,448
  51,745
  53,200
  54,813
  56,583
  58,510
  60,596
  62,843
  65,255
  67,835
  70,588
  73,520
  76,635
  79,941
  83,444
  87,152
  91,074
  95,218
  99,593
  104,209
  109,077
  114,209
  119,616
  125,310
  131,306
  137,617
  144,258
  151,244
  158,592
Total equity, $m
  15,233
  15,584
  15,984
  16,434
  16,932
  17,479
  18,074
  18,718
  19,412
  20,157
  20,954
  21,805
  22,710
  23,673
  24,694
  25,776
  26,921
  28,133
  29,413
  30,764
  32,190
  33,694
  35,279
  36,949
  38,708
  40,560
  42,510
  44,561
  46,719
  48,989
Total liabilities and equity, $m
  64,547
  66,032
  67,729
  69,634
  71,745
  74,062
  76,584
  79,314
  82,255
  85,412
  88,789
  92,393
  96,230
  100,308
  104,635
  109,220
  114,073
  119,207
  124,631
  130,357
  136,399
  142,771
  149,488
  156,565
  164,018
  171,866
  180,127
  188,819
  197,963
  207,581
Debt-to-equity ratio
  1.230
  1.270
  1.320
  1.380
  1.430
  1.490
  1.540
  1.600
  1.660
  1.720
  1.780
  1.830
  1.890
  1.950
  2.000
  2.050
  2.100
  2.150
  2.200
  2.240
  2.290
  2.330
  2.370
  2.410
  2.450
  2.480
  2.520
  2.550
  2.580
  2.610
Adjusted equity ratio
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,488
  2,576
  2,672
  2,779
  2,895
  3,022
  3,160
  3,308
  3,467
  3,637
  6,593
  6,786
  6,991
  7,209
  7,440
  7,684
  7,942
  8,215
  8,503
  8,807
  9,128
  9,466
  9,822
  10,197
  10,592
  11,007
  11,445
  11,905
  12,389
  12,898
Depreciation, amort., depletion, $m
  5,595
  5,636
  5,683
  5,736
  5,795
  5,859
  5,929
  6,005
  6,087
  6,175
  2,467
  2,567
  2,674
  2,787
  2,908
  3,035
  3,170
  3,313
  3,463
  3,622
  3,790
  3,967
  4,154
  4,351
  4,558
  4,776
  5,005
  5,247
  5,501
  5,768
Funds from operations, $m
  8,083
  8,212
  8,356
  8,515
  8,690
  8,882
  9,089
  9,313
  9,554
  9,811
  9,060
  9,353
  9,665
  9,996
  10,347
  10,719
  11,112
  11,528
  11,966
  12,430
  12,918
  13,433
  13,976
  14,548
  15,150
  15,783
  16,450
  17,152
  17,890
  18,666
Change in working capital, $m
  -111
  -130
  -149
  -167
  -185
  -203
  -221
  -239
  -258
  -277
  -296
  -316
  -336
  -358
  -379
  -402
  -426
  -450
  -476
  -502
  -530
  -559
  -589
  -621
  -654
  -688
  -724
  -762
  -802
  -843
Cash from operations, $m
  8,193
  8,343
  8,504
  8,682
  8,875
  9,085
  9,310
  9,552
  9,812
  10,088
  9,356
  9,669
  10,002
  10,354
  10,727
  11,121
  11,538
  11,978
  12,442
  12,932
  13,448
  13,992
  14,565
  15,168
  15,803
  16,472
  17,175
  17,914
  18,692
  19,510
Maintenance CAPEX, $m
  -1,758
  -1,794
  -1,835
  -1,882
  -1,935
  -1,994
  -2,058
  -2,128
  -2,204
  -2,286
  -2,374
  -2,467
  -2,567
  -2,674
  -2,787
  -2,908
  -3,035
  -3,170
  -3,313
  -3,463
  -3,622
  -3,790
  -3,967
  -4,154
  -4,351
  -4,558
  -4,776
  -5,005
  -5,247
  -5,501
New CAPEX, $m
  -539
  -623
  -712
  -799
  -886
  -972
  -1,058
  -1,146
  -1,234
  -1,325
  -1,417
  -1,512
  -1,610
  -1,711
  -1,816
  -1,924
  -2,037
  -2,154
  -2,276
  -2,403
  -2,535
  -2,674
  -2,818
  -2,970
  -3,128
  -3,293
  -3,466
  -3,647
  -3,837
  -4,036
Cash from investing activities, $m
  -2,297
  -2,417
  -2,547
  -2,681
  -2,821
  -2,966
  -3,116
  -3,274
  -3,438
  -3,611
  -3,791
  -3,979
  -4,177
  -4,385
  -4,603
  -4,832
  -5,072
  -5,324
  -5,589
  -5,866
  -6,157
  -6,464
  -6,785
  -7,124
  -7,479
  -7,851
  -8,242
  -8,652
  -9,084
  -9,537
Free cash flow, $m
  5,897
  5,926
  5,957
  6,000
  6,054
  6,119
  6,194
  6,279
  6,373
  6,478
  5,566
  5,690
  5,824
  5,969
  6,124
  6,289
  6,466
  6,654
  6,854
  7,065
  7,290
  7,528
  7,779
  8,045
  8,325
  8,621
  8,933
  9,261
  9,608
  9,973
Issuance/(repayment) of debt, $m
  920
  1,134
  1,297
  1,456
  1,613
  1,770
  1,927
  2,086
  2,247
  2,412
  2,580
  2,753
  2,931
  3,115
  3,306
  3,503
  3,708
  3,922
  4,144
  4,375
  4,616
  4,868
  5,132
  5,407
  5,695
  5,996
  6,311
  6,641
  6,986
  7,348
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  
  920
  1,134
  1,297
  1,456
  1,613
  1,770
  1,927
  2,086
  2,247
  2,412
  2,580
  2,753
  2,931
  3,115
  3,306
  3,503
  3,708
  3,922
  4,144
  4,375
  4,616
  4,868
  5,132
  5,407
  5,695
  5,996
  6,311
  6,641
  6,986
  7,348
Total cash flow (excl. dividends), $m
  6,817
  7,060
  7,254
  7,456
  7,667
  7,889
  8,121
  8,365
  8,621
  8,889
  8,146
  8,443
  8,755
  9,084
  9,429
  9,792
  10,174
  10,575
  10,997
  11,440
  11,906
  12,396
  12,911
  13,451
  14,019
  14,616
  15,243
  15,902
  16,594
  17,321
Retained Cash Flow (-), $m
  -273
  -350
  -400
  -450
  -498
  -547
  -595
  -644
  -694
  -745
  -797
  -850
  -905
  -962
  -1,021
  -1,082
  -1,146
  -1,211
  -1,280
  -1,351
  -1,426
  -1,504
  -1,585
  -1,670
  -1,759
  -1,852
  -1,949
  -2,051
  -2,158
  -2,270
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
  6,544
  6,710
  6,853
  7,006
  7,169
  7,342
  7,526
  7,720
  7,926
  8,145
  7,349
  7,593
  7,850
  8,122
  8,408
  8,710
  9,029
  9,364
  9,717
  10,089
  10,480
  10,892
  11,325
  11,781
  12,260
  12,764
  13,294
  13,851
  14,436
  15,051
Discount rate, %
  5.90
  6.20
  6.50
  6.83
  7.17
  7.53
  7.91
  8.30
  8.72
  9.15
  9.61
  10.09
  10.60
  11.13
  11.68
  12.27
  12.88
  13.52
  14.20
  14.91
  15.65
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
PV of cash for distribution, $m
  6,179
  5,950
  5,673
  5,379
  5,071
  4,749
  4,418
  4,079
  3,736
  3,392
  2,678
  2,395
  2,120
  1,855
  1,603
  1,368
  1,151
  955
  780
  626
  494
  383
  291
  216
  157
  112
  78
  53
  35
  22
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

AstraZeneca PLC (AstraZeneca) is a biopharmaceutical company. The Company focuses on discovery and development of products, which are then manufactured, marketed and sold. The Company focuses on three main therapy areas: Oncology, Cardiovascular & Metabolic Disease (CVMD) and Respiratory, while selectively pursuing therapies in Autoimmunity, Infection and Neuroscience. In CVMD, it is expanding its portfolio into the cardiovascular-renal area with late-stage assets, such as ZS-9 and roxadustat, as well as investing to explore the benefits of its SGLT2 and GLP-1 franchises in chronic kidney disease (CKD) and heart failure (HF). The Company has approximately 40 projects in Phase I, including 29 new molecular entities (NMEs), and 11 oncology combination projects. It has approximately 40 projects in Phase II, including 25 NMEs; four significant additional indications for projects that have reached phase II, and seven oncology combination projects.

FINANCIAL RATIOS  of  AstraZeneca ADR (AZN)

Valuation Ratios
P/E Ratio 14.2
Price to Sales 2.2
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 12
Price to Free Cash Flow 27.1
Growth Rates
Sales Growth Rate -6.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -17%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 97.6%
Total Debt to Equity 113.2%
Interest Coverage 6
Management Effectiveness
Return On Assets 6.8%
Ret/ On Assets - 3 Yr. Avg. 5.1%
Return On Total Capital 10.7%
Ret/ On T. Cap. - 3 Yr. Avg. 7.8%
Return On Equity 21%
Return On Equity - 3 Yr. Avg. 13.9%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 82.6%
Gross Margin - 3 Yr. Avg. 81.1%
EBITDA Margin 28.6%
EBITDA Margin - 3 Yr. Avg. 26.1%
Operating Margin 21.3%
Oper. Margin - 3 Yr. Avg. 15.3%
Pre-Tax Margin 15.4%
Pre-Tax Margin - 3 Yr. Avg. 10.9%
Net Profit Margin 15.2%
Net Profit Margin - 3 Yr. Avg. 10.4%
Effective Tax Rate 4.1%
Eff/ Tax Rate - 3 Yr. Avg. 4.3%
Payout Ratio 101.8%

AZN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AZN stock intrinsic value calculation we used $22465 million for the last fiscal year's total revenue generated by AstraZeneca ADR. The default revenue input number comes from 0001 income statement of AstraZeneca ADR. 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 AZN stock valuation model: a) initial revenue growth rate of 2% 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 5.9%, whose default value for AZN is calculated based on our internal credit rating of AstraZeneca ADR, 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 AstraZeneca ADR.
    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 AZN stock the variable cost ratio is equal to 78.7%.

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 AZN 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 8.7% for AstraZeneca ADR.

Corporate tax rate of 27% is the nominal tax rate for AstraZeneca ADR. 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 AZN 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 AZN are equal to 118.2%.

Life of production assets of 15.1 years is the average useful life of capital assets used in AstraZeneca ADR 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 AZN is equal to -24.7%. 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 - $14960 million for AstraZeneca ADR - 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 467.312 million for AstraZeneca ADR 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 AstraZeneca ADR at the current share price and the inputted number of shares is $18.3 billion.

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