Intrinsic value of Chevron Corporation - CVX

Previous Close

$118.26

  Intrinsic Value

$239.76

stock screener

  Rating & Target

str. buy

+103%

Previous close

$118.26

 
Intrinsic value

$239.76

 
Up/down potential

+103%

 
Rating

str. buy

We calculate the intrinsic value of CVX 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 224.7

 

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, %
  12.60
  11.84
  11.16
  10.54
  9.99
  9.49
  9.04
  8.64
  8.27
  7.94
  7.65
  7.38
  7.15
  6.93
  6.74
  6.56
  6.41
  6.27
  6.14
  6.03
  5.92
  5.83
  5.75
  5.67
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
Revenue, $m
  187,298
  209,474
  232,843
  257,385
  283,089
  309,947
  337,963
  367,147
  397,515
  429,095
  461,921
  496,034
  531,483
  568,324
  606,621
  646,445
  687,871
  730,983
  775,870
  822,629
  871,362
  922,176
  975,187
  1,030,515
  1,088,288
  1,148,640
  1,211,712
  1,277,653
  1,346,617
  1,418,768
Variable operating expenses, $m
  97,525
  109,019
  121,130
  133,850
  147,172
  161,092
  175,613
  190,738
  206,478
  222,845
  239,406
  257,086
  275,459
  294,553
  314,402
  335,042
  356,512
  378,857
  402,121
  426,356
  451,613
  477,949
  505,424
  534,099
  564,042
  595,321
  628,011
  662,187
  697,930
  735,325
Fixed operating expenses, $m
  60,974
  62,315
  63,686
  65,087
  66,519
  67,982
  69,478
  71,006
  72,569
  74,165
  75,797
  77,464
  79,168
  80,910
  82,690
  84,509
  86,369
  88,269
  90,211
  92,195
  94,224
  96,296
  98,415
  100,580
  102,793
  105,054
  107,365
  109,728
  112,142
  114,609
Total operating expenses, $m
  158,499
  171,334
  184,816
  198,937
  213,691
  229,074
  245,091
  261,744
  279,047
  297,010
  315,203
  334,550
  354,627
  375,463
  397,092
  419,551
  442,881
  467,126
  492,332
  518,551
  545,837
  574,245
  603,839
  634,679
  666,835
  700,375
  735,376
  771,915
  810,072
  849,934
Operating income, $m
  28,799
  38,140
  48,026
  58,448
  69,398
  80,873
  92,873
  105,402
  118,469
  132,085
  146,718
  161,483
  176,855
  192,861
  209,529
  226,893
  244,990
  263,858
  283,539
  304,079
  325,526
  347,931
  371,348
  395,835
  421,453
  448,264
  476,336
  505,738
  536,546
  568,835
EBITDA, $m
  50,749
  62,636
  75,204
  88,443
  102,343
  116,901
  132,117
  147,996
  164,549
  181,790
  199,739
  218,419
  237,860
  258,094
  279,159
  301,094
  323,945
  347,762
  372,595
  398,502
  425,543
  453,780
  483,283
  514,121
  546,369
  580,108
  615,419
  652,391
  691,114
  731,685
Interest expense (income), $m
  158
  1,861
  2,536
  3,251
  4,004
  4,795
  5,623
  6,489
  7,392
  8,333
  9,312
  10,330
  11,388
  12,488
  13,631
  14,818
  16,053
  17,336
  18,672
  20,061
  21,508
  23,016
  24,587
  26,225
  27,933
  29,717
  31,579
  33,525
  35,558
  37,683
  39,906
Earnings before tax, $m
  26,938
  35,604
  44,776
  54,444
  64,603
  75,249
  86,383
  98,010
  110,136
  122,773
  136,388
  150,095
  164,368
  179,230
  194,711
  210,841
  227,654
  245,186
  263,477
  282,570
  302,510
  323,344
  345,124
  367,902
  391,736
  416,685
  442,811
  470,181
  498,862
  528,929
Tax expense, $m
  7,273
  9,613
  12,089
  14,700
  17,443
  20,317
  23,324
  26,463
  29,737
  33,149
  36,825
  40,526
  44,379
  48,392
  52,572
  56,927
  61,466
  66,200
  71,139
  76,294
  81,678
  87,303
  93,183
  99,334
  105,769
  112,505
  119,559
  126,949
  134,693
  142,811
Net income, $m
  19,665
  25,991
  32,686
  39,744
  47,160
  54,932
  63,060
  71,547
  80,399
  89,625
  99,563
  109,569
  119,988
  130,838
  142,139
  153,914
  166,187
  178,986
  192,338
  206,276
  220,832
  236,041
  251,940
  268,569
  285,967
  304,180
  323,252
  343,232
  364,169
  386,118

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
  285,951
  319,807
  355,485
  392,955
  432,196
  473,202
  515,974
  560,529
  606,894
  655,108
  705,223
  757,304
  811,424
  867,670
  926,140
  986,938
  1,050,184
  1,116,004
  1,184,535
  1,255,923
  1,330,323
  1,407,902
  1,488,835
  1,573,305
  1,661,508
  1,753,649
  1,849,942
  1,950,615
  2,055,904
  2,166,059
Adjusted assets (=assets-cash), $m
  285,951
  319,807
  355,485
  392,955
  432,196
  473,202
  515,974
  560,529
  606,894
  655,108
  705,223
  757,304
  811,424
  867,670
  926,140
  986,938
  1,050,184
  1,116,004
  1,184,535
  1,255,923
  1,330,323
  1,407,902
  1,488,835
  1,573,305
  1,661,508
  1,753,649
  1,849,942
  1,950,615
  2,055,904
  2,166,059
Revenue / Adjusted assets
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
  0.655
Average production assets, $m
  197,786
  221,204
  245,882
  271,799
  298,942
  327,304
  356,889
  387,707
  419,776
  453,125
  487,789
  523,812
  561,246
  600,150
  640,592
  682,646
  726,392
  771,918
  819,319
  868,697
  920,158
  973,818
  1,029,797
  1,088,224
  1,149,232
  1,212,964
  1,279,568
  1,349,201
  1,422,028
  1,498,219
Working capital, $m
  2,435
  2,723
  3,027
  3,346
  3,680
  4,029
  4,394
  4,773
  5,168
  5,578
  6,005
  6,448
  6,909
  7,388
  7,886
  8,404
  8,942
  9,503
  10,086
  10,694
  11,328
  11,988
  12,677
  13,397
  14,148
  14,932
  15,752
  16,609
  17,506
  18,444
Total debt, $m
  46,957
  60,195
  74,145
  88,795
  104,139
  120,172
  136,896
  154,317
  172,445
  191,297
  210,892
  231,256
  252,417
  274,409
  297,271
  321,043
  345,772
  371,508
  398,303
  426,216
  455,306
  485,640
  517,284
  550,312
  584,800
  620,827
  658,477
  697,840
  739,008
  782,079
Total liabilities, $m
  111,807
  125,045
  138,995
  153,645
  168,989
  185,022
  201,746
  219,167
  237,295
  256,147
  275,742
  296,106
  317,267
  339,259
  362,121
  385,893
  410,622
  436,358
  463,153
  491,066
  520,156
  550,490
  582,134
  615,162
  649,650
  685,677
  723,327
  762,690
  803,858
  846,929
Total equity, $m
  174,144
  194,763
  216,490
  239,309
  263,208
  288,180
  314,228
  341,362
  369,598
  398,961
  429,481
  461,198
  494,157
  528,411
  564,019
  601,046
  639,562
  679,647
  721,382
  764,857
  810,167
  857,413
  906,700
  958,143
  1,011,858
  1,067,972
  1,126,615
  1,187,924
  1,252,046
  1,319,130
Total liabilities and equity, $m
  285,951
  319,808
  355,485
  392,954
  432,197
  473,202
  515,974
  560,529
  606,893
  655,108
  705,223
  757,304
  811,424
  867,670
  926,140
  986,939
  1,050,184
  1,116,005
  1,184,535
  1,255,923
  1,330,323
  1,407,903
  1,488,834
  1,573,305
  1,661,508
  1,753,649
  1,849,942
  1,950,614
  2,055,904
  2,166,059
Debt-to-equity ratio
  0.270
  0.310
  0.340
  0.370
  0.400
  0.420
  0.440
  0.450
  0.470
  0.480
  0.490
  0.500
  0.510
  0.520
  0.530
  0.530
  0.540
  0.550
  0.550
  0.560
  0.560
  0.570
  0.570
  0.570
  0.580
  0.580
  0.580
  0.590
  0.590
  0.590
Adjusted equity ratio
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609
  0.609

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  19,665
  25,991
  32,686
  39,744
  47,160
  54,932
  63,060
  71,547
  80,399
  89,625
  99,563
  109,569
  119,988
  130,838
  142,139
  153,914
  166,187
  178,986
  192,338
  206,276
  220,832
  236,041
  251,940
  268,569
  285,967
  304,180
  323,252
  343,232
  364,169
  386,118
Depreciation, amort., depletion, $m
  21,950
  24,496
  27,178
  29,995
  32,945
  36,028
  39,244
  42,594
  46,080
  49,705
  53,021
  56,936
  61,005
  65,234
  69,630
  74,201
  78,956
  83,904
  89,056
  94,424
  100,017
  105,850
  111,934
  118,285
  124,916
  131,844
  139,083
  146,652
  154,568
  162,850
Funds from operations, $m
  41,615
  50,487
  59,864
  69,739
  80,105
  90,960
  102,304
  114,141
  126,479
  139,329
  152,584
  166,505
  180,993
  196,072
  211,769
  228,114
  245,143
  262,890
  281,395
  300,700
  320,849
  341,891
  363,875
  386,854
  410,884
  436,024
  462,336
  489,884
  518,738
  548,968
Change in working capital, $m
  272
  288
  304
  319
  334
  349
  364
  379
  395
  411
  427
  443
  461
  479
  498
  518
  539
  560
  584
  608
  634
  661
  689
  719
  751
  785
  820
  857
  897
  938
Cash from operations, $m
  41,343
  50,199
  59,561
  69,420
  79,771
  90,611
  101,940
  113,762
  126,084
  138,918
  152,157
  166,062
  180,532
  195,593
  211,271
  227,597
  244,604
  262,329
  280,811
  300,092
  320,216
  341,230
  363,186
  386,134
  410,133
  435,239
  461,516
  489,027
  517,841
  548,030
Maintenance CAPEX, $m
  -19,100
  -21,499
  -24,044
  -26,726
  -29,543
  -32,494
  -35,577
  -38,792
  -42,142
  -45,628
  -49,253
  -53,021
  -56,936
  -61,005
  -65,234
  -69,630
  -74,201
  -78,956
  -83,904
  -89,056
  -94,424
  -100,017
  -105,850
  -111,934
  -118,285
  -124,916
  -131,844
  -139,083
  -146,652
  -154,568
New CAPEX, $m
  -22,065
  -23,418
  -24,678
  -25,917
  -27,143
  -28,363
  -29,585
  -30,818
  -32,069
  -33,349
  -34,664
  -36,023
  -37,434
  -38,905
  -40,442
  -42,053
  -43,746
  -45,526
  -47,401
  -49,377
  -51,461
  -53,660
  -55,979
  -58,426
  -61,008
  -63,732
  -66,604
  -69,633
  -72,826
  -76,192
Cash from investing activities, $m
  -41,165
  -44,917
  -48,722
  -52,643
  -56,686
  -60,857
  -65,162
  -69,610
  -74,211
  -78,977
  -83,917
  -89,044
  -94,370
  -99,910
  -105,676
  -111,683
  -117,947
  -124,482
  -131,305
  -138,433
  -145,885
  -153,677
  -161,829
  -170,360
  -179,293
  -188,648
  -198,448
  -208,716
  -219,478
  -230,760
Free cash flow, $m
  178
  5,282
  10,839
  16,777
  23,085
  29,755
  36,778
  44,152
  51,873
  59,942
  68,241
  77,018
  86,162
  95,683
  105,595
  115,914
  126,658
  137,847
  149,506
  161,658
  174,331
  187,553
  201,357
  215,774
  230,839
  246,591
  263,067
  280,310
  298,362
  317,270
Issuance/(repayment) of debt, $m
  12,498
  13,238
  13,950
  14,651
  15,344
  16,033
  16,724
  17,421
  18,129
  18,852
  19,595
  20,363
  21,161
  21,992
  22,861
  23,772
  24,729
  25,736
  26,796
  27,913
  29,091
  30,333
  31,644
  33,028
  34,487
  36,027
  37,651
  39,363
  41,168
  43,070
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  
  12,498
  13,238
  13,950
  14,651
  15,344
  16,033
  16,724
  17,421
  18,129
  18,852
  19,595
  20,363
  21,161
  21,992
  22,861
  23,772
  24,729
  25,736
  26,796
  27,913
  29,091
  30,333
  31,644
  33,028
  34,487
  36,027
  37,651
  39,363
  41,168
  43,070
Total cash flow (excl. dividends), $m
  12,676
  18,520
  24,789
  31,428
  38,429
  45,788
  53,502
  61,573
  70,001
  78,794
  87,836
  97,382
  107,323
  117,676
  128,457
  139,686
  151,387
  163,583
  176,301
  189,571
  203,422
  217,887
  233,001
  248,801
  265,327
  282,618
  300,718
  319,673
  339,530
  360,340
Retained Cash Flow (-), $m
  -19,590
  -20,619
  -21,728
  -22,819
  -23,898
  -24,972
  -26,048
  -27,134
  -28,236
  -29,362
  -30,520
  -31,717
  -32,959
  -34,254
  -35,608
  -37,027
  -38,517
  -40,084
  -41,735
  -43,475
  -45,310
  -47,246
  -49,288
  -51,442
  -53,716
  -56,114
  -58,643
  -61,310
  -64,121
  -67,084
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
  -6,914
  -2,098
  3,061
  8,609
  14,530
  20,815
  27,454
  34,439
  41,765
  49,431
  57,315
  65,665
  74,364
  83,422
  92,849
  102,660
  112,870
  123,499
  134,566
  146,096
  158,112
  170,641
  183,713
  197,359
  211,611
  226,504
  242,075
  258,364
  275,409
  293,256
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
  -6,629
  -1,921
  2,664
  7,088
  11,263
  15,107
  18,547
  21,525
  23,992
  25,915
  27,218
  28,022
  28,275
  28,006
  27,259
  26,088
  24,559
  22,743
  20,719
  18,564
  16,354
  14,159
  12,041
  10,052
  8,232
  6,608
  5,196
  3,997
  3,006
  2,208
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

Chevron Corporation (Chevron) manages its investments in subsidiaries and affiliates, and provides administrative, financial, management and technology support to the United States and international subsidiaries that engage in integrated energy and chemicals operations. The Company operates through two business segments: Upstream and Downstream. Upstream operations consist primarily of exploring for, developing and producing crude oil and natural gas; liquefaction, transportation and regasification associated with liquefied natural gas; transporting crude oil by international oil export pipelines; processing, transporting, storage and marketing of natural gas, and a gas-to-liquids plant. Downstream operations consist primarily of refining of crude oil into petroleum products; marketing of crude oil and refined products; transporting of crude oil and refined products, and manufacturing and marketing of commodity petrochemicals.

FINANCIAL RATIOS  of  Chevron Corporation (CVX)

Valuation Ratios
P/E Ratio -450.1
Price to Sales 2
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 17.4
Price to Free Cash Flow -42.5
Growth Rates
Sales Growth Rate -14.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -38.6%
Cap. Spend. - 3 Yr. Gr. Rate -13.8%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 24.2%
Total Debt to Equity 31.7%
Interest Coverage -13
Management Effectiveness
Return On Assets -0.2%
Ret/ On Assets - 3 Yr. Avg. 3%
Return On Total Capital -0.3%
Ret/ On T. Cap. - 3 Yr. Avg. 4.4%
Return On Equity -0.3%
Return On Equity - 3 Yr. Avg. 5.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 46.3%
Gross Margin - 3 Yr. Avg. 42.9%
EBITDA Margin 15.8%
EBITDA Margin - 3 Yr. Avg. 19.9%
Operating Margin -3.9%
Oper. Margin - 3 Yr. Avg. 2.6%
Pre-Tax Margin -2%
Pre-Tax Margin - 3 Yr. Avg. 5.8%
Net Profit Margin -0.4%
Net Profit Margin - 3 Yr. Avg. 4.2%
Effective Tax Rate 80%
Eff/ Tax Rate - 3 Yr. Avg. 40.3%
Payout Ratio -1616.1%

CVX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CVX stock intrinsic value calculation we used $166339 million for the last fiscal year's total revenue generated by Chevron Corporation. The default revenue input number comes from 0001 income statement of Chevron 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 CVX stock valuation model: a) initial revenue growth rate of 12.6% 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 CVX is calculated based on our internal credit rating of Chevron 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 Chevron 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 CVX stock the variable cost ratio is equal to 52.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $59661 million in the base year in the intrinsic value calculation for CVX 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 Chevron Corporation.

Corporate tax rate of 27% is the nominal tax rate for Chevron 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 CVX 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 CVX are equal to 105.6%.

Life of production assets of 9.2 years is the average useful life of capital assets used in Chevron 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 CVX is equal to 1.3%. 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 - $154554 million for Chevron 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 1900.088 million for Chevron 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 Chevron Corporation at the current share price and the inputted number of shares is $224.7 billion.

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