Intrinsic value of Walt Disney - DIS

Previous Close

$112.48

  Intrinsic Value

$112.76

stock screener

  Rating & Target

hold

0%

Previous close

$112.48

 
Intrinsic value

$112.76

 
Up/down potential

0%

 
Rating

hold

We calculate the intrinsic value of DIS 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 176.4

 

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, %
  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
  56,240
  57,533
  59,012
  60,672
  62,511
  64,529
  66,727
  69,106
  71,669
  74,419
  77,362
  80,502
  83,845
  87,397
  91,168
  95,163
  99,392
  103,864
  108,590
  113,579
  118,844
  124,396
  130,248
  136,414
  142,909
  149,746
  156,943
  164,517
  172,484
  180,865
Variable operating expenses, $m
  8,303
  8,405
  8,523
  8,654
  8,800
  8,960
  9,135
  9,323
  9,527
  9,745
  6,136
  6,385
  6,650
  6,932
  7,231
  7,548
  7,883
  8,238
  8,613
  9,009
  9,426
  9,867
  10,331
  10,820
  11,335
  11,877
  12,448
  13,049
  13,681
  14,346
Fixed operating expenses, $m
  34,618
  35,380
  36,158
  36,954
  37,767
  38,597
  39,447
  40,314
  41,201
  42,108
  43,034
  43,981
  44,949
  45,937
  46,948
  47,981
  49,036
  50,115
  51,218
  52,345
  53,496
  54,673
  55,876
  57,105
  58,361
  59,645
  60,958
  62,299
  63,669
  65,070
Total operating expenses, $m
  42,921
  43,785
  44,681
  45,608
  46,567
  47,557
  48,582
  49,637
  50,728
  51,853
  49,170
  50,366
  51,599
  52,869
  54,179
  55,529
  56,919
  58,353
  59,831
  61,354
  62,922
  64,540
  66,207
  67,925
  69,696
  71,522
  73,406
  75,348
  77,350
  79,416
Operating income, $m
  13,319
  13,748
  14,331
  15,064
  15,944
  16,972
  18,146
  19,468
  20,941
  22,567
  28,192
  30,136
  32,246
  34,528
  36,988
  39,634
  42,472
  45,511
  48,759
  52,226
  55,921
  59,856
  64,042
  68,489
  73,212
  78,223
  83,537
  89,169
  95,134
  101,449
EBITDA, $m
  23,735
  24,316
  25,072
  25,998
  27,094
  28,357
  29,788
  31,389
  33,161
  35,108
  37,235
  39,546
  42,047
  44,745
  47,646
  50,758
  54,091
  57,653
  61,453
  65,503
  69,814
  74,398
  79,268
  84,436
  89,918
  95,729
  101,884
  108,401
  115,298
  122,592
Interest expense (income), $m
  466
  1,366
  1,424
  1,493
  1,572
  1,661
  1,759
  1,866
  1,984
  2,110
  2,247
  2,394
  2,551
  2,718
  2,897
  3,086
  3,287
  3,500
  3,726
  3,965
  4,217
  4,483
  4,764
  5,060
  5,372
  5,701
  6,047
  6,412
  6,796
  7,200
  7,625
Earnings before tax, $m
  11,953
  12,324
  12,838
  13,492
  14,284
  15,213
  16,279
  17,485
  18,830
  20,319
  25,798
  27,585
  29,527
  31,631
  33,902
  36,347
  38,972
  41,785
  44,794
  48,009
  51,439
  55,093
  58,982
  63,117
  67,511
  72,176
  77,125
  82,373
  87,934
  93,824
Tax expense, $m
  3,227
  3,327
  3,466
  3,643
  3,857
  4,107
  4,395
  4,721
  5,084
  5,486
  6,965
  7,448
  7,972
  8,540
  9,154
  9,814
  10,522
  11,282
  12,094
  12,962
  13,888
  14,875
  15,925
  17,042
  18,228
  19,488
  20,824
  22,241
  23,742
  25,333
Net income, $m
  8,726
  8,996
  9,372
  9,849
  10,427
  11,105
  11,884
  12,764
  13,746
  14,833
  18,832
  20,137
  21,555
  23,091
  24,749
  26,533
  28,449
  30,503
  32,700
  35,047
  37,550
  40,218
  43,057
  46,076
  49,283
  52,689
  56,301
  60,132
  64,192
  68,492

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
  97,638
  99,884
  102,451
  105,333
  108,526
  112,030
  115,846
  119,976
  124,425
  129,200
  134,309
  139,760
  145,564
  151,732
  158,277
  165,213
  172,555
  180,320
  188,524
  197,186
  206,326
  215,965
  226,126
  236,831
  248,105
  259,976
  272,471
  285,619
  299,452
  314,001
Adjusted assets (=assets-cash), $m
  97,638
  99,884
  102,451
  105,333
  108,526
  112,030
  115,846
  119,976
  124,425
  129,200
  134,309
  139,760
  145,564
  151,732
  158,277
  165,213
  172,555
  180,320
  188,524
  197,186
  206,326
  215,965
  226,126
  236,831
  248,105
  259,976
  272,471
  285,619
  299,452
  314,001
Revenue / Adjusted assets
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
Average production assets, $m
  65,744
  67,256
  68,985
  70,925
  73,076
  75,435
  78,004
  80,785
  83,781
  86,996
  90,436
  94,106
  98,014
  102,168
  106,575
  111,245
  116,189
  121,417
  126,941
  132,774
  138,929
  145,419
  152,260
  159,468
  167,060
  175,053
  183,467
  192,320
  201,634
  211,431
Working capital, $m
  -7,649
  -7,825
  -8,026
  -8,251
  -8,502
  -8,776
  -9,075
  -9,398
  -9,747
  -10,121
  -10,521
  -10,948
  -11,403
  -11,886
  -12,399
  -12,942
  -13,517
  -14,126
  -14,768
  -15,447
  -16,163
  -16,918
  -17,714
  -18,552
  -19,436
  -20,366
  -21,344
  -22,374
  -23,458
  -24,598
Total debt, $m
  26,373
  27,651
  29,112
  30,752
  32,569
  34,562
  36,733
  39,083
  41,615
  44,332
  47,239
  50,340
  53,643
  57,152
  60,877
  64,823
  69,001
  73,419
  78,087
  83,016
  88,217
  93,701
  99,482
  105,574
  111,989
  118,744
  125,853
  133,334
  141,205
  149,484
Total liabilities, $m
  55,556
  56,834
  58,295
  59,935
  61,752
  63,745
  65,916
  68,266
  70,798
  73,515
  76,422
  79,523
  82,826
  86,335
  90,060
  94,006
  98,184
  102,602
  107,270
  112,199
  117,400
  122,884
  128,665
  134,757
  141,172
  147,927
  155,036
  162,517
  170,388
  178,667
Total equity, $m
  42,082
  43,050
  44,156
  45,399
  46,775
  48,285
  49,929
  51,710
  53,627
  55,685
  57,887
  60,236
  62,738
  65,396
  68,217
  71,207
  74,371
  77,718
  81,254
  84,987
  88,927
  93,081
  97,460
  102,074
  106,933
  112,050
  117,435
  123,102
  129,064
  135,335
Total liabilities and equity, $m
  97,638
  99,884
  102,451
  105,334
  108,527
  112,030
  115,845
  119,976
  124,425
  129,200
  134,309
  139,759
  145,564
  151,731
  158,277
  165,213
  172,555
  180,320
  188,524
  197,186
  206,327
  215,965
  226,125
  236,831
  248,105
  259,977
  272,471
  285,619
  299,452
  314,002
Debt-to-equity ratio
  0.630
  0.640
  0.660
  0.680
  0.700
  0.720
  0.740
  0.760
  0.780
  0.800
  0.820
  0.840
  0.860
  0.870
  0.890
  0.910
  0.930
  0.940
  0.960
  0.980
  0.990
  1.010
  1.020
  1.030
  1.050
  1.060
  1.070
  1.080
  1.090
  1.100
Adjusted equity ratio
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8,726
  8,996
  9,372
  9,849
  10,427
  11,105
  11,884
  12,764
  13,746
  14,833
  18,832
  20,137
  21,555
  23,091
  24,749
  26,533
  28,449
  30,503
  32,700
  35,047
  37,550
  40,218
  43,057
  46,076
  49,283
  52,689
  56,301
  60,132
  64,192
  68,492
Depreciation, amort., depletion, $m
  10,417
  10,568
  10,741
  10,935
  11,150
  11,386
  11,642
  11,921
  12,220
  12,542
  9,044
  9,411
  9,801
  10,217
  10,657
  11,125
  11,619
  12,142
  12,694
  13,277
  13,893
  14,542
  15,226
  15,947
  16,706
  17,505
  18,347
  19,232
  20,163
  21,143
Funds from operations, $m
  19,142
  19,564
  20,112
  20,784
  21,577
  22,491
  23,526
  24,684
  25,966
  27,375
  27,876
  29,547
  31,356
  33,308
  35,406
  37,658
  40,068
  42,645
  45,394
  48,324
  51,443
  54,759
  58,283
  62,022
  65,989
  70,194
  74,648
  79,364
  84,355
  89,635
Change in working capital, $m
  -150
  -176
  -201
  -226
  -250
  -274
  -299
  -324
  -349
  -374
  -400
  -427
  -455
  -483
  -513
  -543
  -575
  -608
  -643
  -679
  -716
  -755
  -796
  -839
  -883
  -930
  -979
  -1,030
  -1,084
  -1,140
Cash from operations, $m
  19,292
  19,740
  20,313
  21,009
  21,827
  22,765
  23,825
  25,008
  26,315
  27,749
  28,276
  29,974
  31,811
  33,791
  35,919
  38,201
  40,643
  43,253
  46,037
  49,003
  52,159
  55,515
  59,079
  62,861
  66,872
  71,124
  75,627
  80,394
  85,439
  90,774
Maintenance CAPEX, $m
  -6,447
  -6,574
  -6,726
  -6,898
  -7,093
  -7,308
  -7,543
  -7,800
  -8,078
  -8,378
  -8,700
  -9,044
  -9,411
  -9,801
  -10,217
  -10,657
  -11,125
  -11,619
  -12,142
  -12,694
  -13,277
  -13,893
  -14,542
  -15,226
  -15,947
  -16,706
  -17,505
  -18,347
  -19,232
  -20,163
New CAPEX, $m
  -1,277
  -1,512
  -1,728
  -1,941
  -2,150
  -2,359
  -2,569
  -2,781
  -2,996
  -3,215
  -3,440
  -3,670
  -3,908
  -4,153
  -4,407
  -4,670
  -4,944
  -5,228
  -5,524
  -5,833
  -6,154
  -6,490
  -6,841
  -7,208
  -7,592
  -7,993
  -8,413
  -8,853
  -9,314
  -9,797
Cash from investing activities, $m
  -7,724
  -8,086
  -8,454
  -8,839
  -9,243
  -9,667
  -10,112
  -10,581
  -11,074
  -11,593
  -12,140
  -12,714
  -13,319
  -13,954
  -14,624
  -15,327
  -16,069
  -16,847
  -17,666
  -18,527
  -19,431
  -20,383
  -21,383
  -22,434
  -23,539
  -24,699
  -25,918
  -27,200
  -28,546
  -29,960
Free cash flow, $m
  11,569
  11,653
  11,859
  12,170
  12,584
  13,099
  13,713
  14,427
  15,240
  16,156
  16,137
  17,260
  18,492
  19,836
  21,295
  22,873
  24,575
  26,406
  28,371
  30,476
  32,727
  35,131
  37,695
  40,427
  43,334
  46,425
  49,708
  53,194
  56,893
  60,814
Issuance/(repayment) of debt, $m
  1,082
  1,278
  1,461
  1,640
  1,817
  1,994
  2,171
  2,350
  2,532
  2,717
  2,907
  3,102
  3,302
  3,510
  3,724
  3,947
  4,178
  4,418
  4,668
  4,929
  5,201
  5,485
  5,781
  6,091
  6,415
  6,755
  7,110
  7,481
  7,871
  8,279
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  
  1,082
  1,278
  1,461
  1,640
  1,817
  1,994
  2,171
  2,350
  2,532
  2,717
  2,907
  3,102
  3,302
  3,510
  3,724
  3,947
  4,178
  4,418
  4,668
  4,929
  5,201
  5,485
  5,781
  6,091
  6,415
  6,755
  7,110
  7,481
  7,871
  8,279
Total cash flow (excl. dividends), $m
  12,651
  12,931
  13,320
  13,810
  14,401
  15,092
  15,884
  16,777
  17,772
  18,873
  19,043
  20,362
  21,795
  23,346
  25,019
  26,820
  28,753
  30,824
  33,039
  35,405
  37,928
  40,616
  43,476
  46,518
  49,749
  53,179
  56,818
  60,676
  64,764
  69,093
Retained Cash Flow (-), $m
  -767
  -968
  -1,106
  -1,242
  -1,376
  -1,510
  -1,644
  -1,780
  -1,918
  -2,058
  -2,202
  -2,349
  -2,501
  -2,658
  -2,821
  -2,990
  -3,165
  -3,346
  -3,536
  -3,733
  -3,939
  -4,154
  -4,379
  -4,614
  -4,859
  -5,116
  -5,385
  -5,667
  -5,962
  -6,271
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
  386
  394
  403
  413
  425
  438
  452
  467
  484
  502
  521
  542
  564
  587
  612
  638
  666
  696
  727
  760
  795
  832
  871
  912
  955
  1,000
  1,048
  1,099
  1,152
  1,207
Cash available for distribution, $m
  11,884
  11,963
  12,213
  12,568
  13,025
  13,582
  14,239
  14,996
  15,854
  16,815
  16,842
  18,013
  19,293
  20,687
  22,198
  23,830
  25,588
  27,477
  29,503
  31,671
  33,988
  36,461
  39,097
  41,904
  44,890
  48,063
  51,433
  55,009
  58,802
  62,822
Discount rate, %
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  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
PV of cash for distribution, $m
  11,383
  10,930
  10,595
  10,303
  10,038
  9,786
  9,535
  9,274
  8,994
  8,688
  7,865
  7,541
  7,179
  6,778
  6,341
  5,874
  5,382
  4,874
  4,358
  3,845
  3,344
  2,864
  2,414
  2,000
  1,627
  1,299
  1,016
  778
  582
  426
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

The Walt Disney Company is an entertainment company. The Company operates in four business segments: Media Networks, Parks and Resorts, Studio Entertainment, and Consumer Products & Interactive Media. The media networks segment includes cable and broadcast television networks, television production and distribution operations, domestic television stations, and radio networks and stations. Under the Parks and Resorts segment, the Company's Walt Disney Imagineering unit designs and develops new theme park concepts and attractions, as well as resort properties. The studio entertainment segment produces and acquires live-action and animated motion pictures, direct-to-video content, musical recordings and live stage plays. It also develops and publishes games, primarily for mobile platforms, books, magazines and comic books. The Company distributes merchandise directly through retail, online and wholesale businesses. Its cable networks consist of ESPN, the Disney Channels and Freeform.

FINANCIAL RATIOS  of  Walt Disney (DIS)

Valuation Ratios
P/E Ratio 18.8
Price to Sales 3.1
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 13.7
Price to Free Cash Flow 19.3
Growth Rates
Sales Growth Rate -0.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -24.1%
Cap. Spend. - 3 Yr. Gr. Rate 1.8%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 46.3%
Total Debt to Equity 61.2%
Interest Coverage 31
Management Effectiveness
Return On Assets 9.9%
Ret/ On Assets - 3 Yr. Avg. 10.2%
Return On Total Capital 13.8%
Ret/ On T. Cap. - 3 Yr. Avg. 14.2%
Return On Equity 21.2%
Return On Equity - 3 Yr. Avg. 20.5%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 45%
Gross Margin - 3 Yr. Avg. 45.7%
EBITDA Margin 30.9%
EBITDA Margin - 3 Yr. Avg. 31.5%
Operating Margin 25.1%
Oper. Margin - 3 Yr. Avg. 25.3%
Pre-Tax Margin 25%
Pre-Tax Margin - 3 Yr. Avg. 26.1%
Net Profit Margin 16.3%
Net Profit Margin - 3 Yr. Avg. 16.4%
Effective Tax Rate 32.1%
Eff/ Tax Rate - 3 Yr. Avg. 34.1%
Payout Ratio 27.2%

DIS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DIS stock intrinsic value calculation we used $55137 million for the last fiscal year's total revenue generated by Walt Disney. The default revenue input number comes from 2017 income statement of Walt Disney. 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 DIS 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 4.4%, whose default value for DIS is calculated based on our internal credit rating of Walt Disney, 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 Walt Disney.
    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 DIS stock the variable cost ratio is equal to 14.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $33873 million in the base year in the intrinsic value calculation for DIS 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 Walt Disney.

Corporate tax rate of 27% is the nominal tax rate for Walt Disney. 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 DIS stock is equal to 0.7%.

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 DIS are equal to 116.9%.

Life of production assets of 10 years is the average useful life of capital assets used in Walt Disney 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 DIS is equal to -13.6%. 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 - $41315 million for Walt Disney - 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 1568 million for Walt Disney 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 Walt Disney at the current share price and the inputted number of shares is $176.4 billion.

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