Intrinsic value of General Dynamics Corporation - GD

Previous Close

$171.67

  Intrinsic Value

$555.02

stock screener

  Rating & Target

str. buy

+223%

Previous close

$171.67

 
Intrinsic value

$555.02

 
Up/down potential

+223%

 
Rating

str. buy

We calculate the intrinsic value of GD 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 49.5

 

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, %
  25.40
  23.36
  21.52
  19.87
  18.38
  17.05
  15.84
  14.76
  13.78
  12.90
  12.11
  11.40
  10.76
  10.19
  9.67
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
Revenue, $m
  45,386
  55,988
  68,039
  81,560
  96,554
  113,012
  130,915
  150,235
  170,939
  192,996
  216,374
  241,044
  266,984
  294,178
  322,616
  352,297
  383,229
  415,428
  448,920
  483,737
  519,921
  557,523
  596,599
  637,216
  679,446
  723,369
  769,072
  816,648
  866,199
  917,832
Variable operating expenses, $m
  38,605
  47,105
  56,766
  67,606
  79,627
  92,822
  107,175
  122,664
  139,263
  156,947
  173,471
  193,250
  214,047
  235,848
  258,647
  282,443
  307,242
  333,057
  359,908
  387,822
  416,832
  446,977
  478,306
  510,869
  544,725
  579,939
  616,580
  654,723
  694,450
  735,845
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
  38,605
  47,105
  56,766
  67,606
  79,627
  92,822
  107,175
  122,664
  139,263
  156,947
  173,471
  193,250
  214,047
  235,848
  258,647
  282,443
  307,242
  333,057
  359,908
  387,822
  416,832
  446,977
  478,306
  510,869
  544,725
  579,939
  616,580
  654,723
  694,450
  735,845
Operating income, $m
  6,781
  8,883
  11,273
  13,954
  16,927
  20,190
  23,740
  27,571
  31,676
  36,049
  42,903
  47,794
  52,938
  58,330
  63,968
  69,853
  75,987
  82,371
  89,012
  95,915
  103,090
  110,546
  118,294
  126,347
  134,720
  143,429
  152,491
  161,925
  171,750
  181,988
EBITDA, $m
  9,565
  11,799
  14,339
  17,188
  20,348
  23,817
  27,590
  31,661
  36,024
  40,673
  45,600
  50,799
  56,265
  61,996
  67,989
  74,244
  80,763
  87,549
  94,607
  101,945
  109,570
  117,495
  125,730
  134,290
  143,189
  152,446
  162,077
  172,104
  182,546
  193,428
Interest expense (income), $m
  83
  671
  1,134
  1,667
  2,273
  2,952
  3,706
  4,534
  5,434
  6,405
  7,446
  8,555
  9,730
  10,970
  12,274
  13,641
  15,071
  16,563
  18,118
  19,737
  21,421
  23,171
  24,990
  26,881
  28,845
  30,887
  33,010
  35,218
  37,516
  39,908
  42,399
Earnings before tax, $m
  6,111
  7,750
  9,606
  11,681
  13,974
  16,484
  19,206
  22,137
  25,271
  28,604
  34,348
  38,064
  41,967
  46,055
  50,327
  54,782
  59,423
  64,253
  69,275
  74,494
  79,919
  85,555
  91,413
  97,502
  103,833
  110,419
  117,273
  124,409
  131,842
  139,589
Tax expense, $m
  1,650
  2,092
  2,594
  3,154
  3,773
  4,451
  5,186
  5,977
  6,823
  7,723
  9,274
  10,277
  11,331
  12,435
  13,588
  14,791
  16,044
  17,348
  18,704
  20,114
  21,578
  23,100
  24,681
  26,326
  28,035
  29,813
  31,664
  33,590
  35,597
  37,689
Net income, $m
  4,461
  5,657
  7,012
  8,527
  10,201
  12,033
  14,021
  16,160
  18,448
  20,881
  25,074
  27,787
  30,636
  33,620
  36,739
  39,991
  43,379
  46,905
  50,571
  54,381
  58,341
  62,455
  66,731
  71,176
  75,798
  80,606
  85,609
  90,819
  96,245
  101,900

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
  56,946
  70,249
  85,369
  102,333
  121,147
  141,797
  164,260
  188,500
  214,478
  242,153
  271,485
  302,439
  334,987
  369,106
  404,787
  442,029
  480,839
  521,240
  563,262
  606,947
  652,348
  699,527
  748,556
  799,518
  852,504
  907,614
  964,958
  1,024,653
  1,086,825
  1,151,609
Adjusted assets (=assets-cash), $m
  56,946
  70,249
  85,369
  102,333
  121,147
  141,797
  164,260
  188,500
  214,478
  242,153
  271,485
  302,439
  334,987
  369,106
  404,787
  442,029
  480,839
  521,240
  563,262
  606,947
  652,348
  699,527
  748,556
  799,518
  852,504
  907,614
  964,958
  1,024,653
  1,086,825
  1,151,609
Revenue / Adjusted assets
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
  0.797
Average production assets, $m
  15,840
  19,540
  23,746
  28,464
  33,697
  39,441
  45,689
  52,432
  59,658
  67,356
  75,514
  84,124
  93,178
  102,668
  112,593
  122,952
  133,747
  144,985
  156,673
  168,824
  181,453
  194,575
  208,213
  222,388
  237,127
  252,456
  268,406
  285,010
  302,304
  320,324
Working capital, $m
  4,357
  5,375
  6,532
  7,830
  9,269
  10,849
  12,568
  14,423
  16,410
  18,528
  20,772
  23,140
  25,630
  28,241
  30,971
  33,820
  36,790
  39,881
  43,096
  46,439
  49,912
  53,522
  57,274
  61,173
  65,227
  69,443
  73,831
  78,398
  83,155
  88,112
Total debt, $m
  20,995
  30,866
  42,085
  54,672
  68,632
  83,955
  100,622
  118,608
  137,884
  158,419
  180,183
  203,151
  227,301
  252,618
  279,093
  306,726
  335,524
  365,501
  396,682
  429,096
  462,783
  497,790
  534,170
  571,984
  611,299
  652,191
  694,740
  739,033
  785,165
  833,235
Total liabilities, $m
  42,254
  52,125
  63,344
  75,931
  89,891
  105,214
  121,881
  139,867
  159,143
  179,678
  201,442
  224,410
  248,560
  273,877
  300,352
  327,985
  356,783
  386,760
  417,941
  450,355
  484,042
  519,049
  555,429
  593,243
  632,558
  673,450
  715,999
  760,292
  806,424
  854,494
Total equity, $m
  14,692
  18,124
  22,025
  26,402
  31,256
  36,584
  42,379
  48,633
  55,335
  62,476
  70,043
  78,029
  86,427
  95,229
  104,435
  114,043
  124,057
  134,480
  145,322
  156,592
  168,306
  180,478
  193,128
  206,276
  219,946
  234,165
  248,959
  264,360
  280,401
  297,115
Total liabilities and equity, $m
  56,946
  70,249
  85,369
  102,333
  121,147
  141,798
  164,260
  188,500
  214,478
  242,154
  271,485
  302,439
  334,987
  369,106
  404,787
  442,028
  480,840
  521,240
  563,263
  606,947
  652,348
  699,527
  748,557
  799,519
  852,504
  907,615
  964,958
  1,024,652
  1,086,825
  1,151,609
Debt-to-equity ratio
  1.430
  1.700
  1.910
  2.070
  2.200
  2.290
  2.370
  2.440
  2.490
  2.540
  2.570
  2.600
  2.630
  2.650
  2.670
  2.690
  2.700
  2.720
  2.730
  2.740
  2.750
  2.760
  2.770
  2.770
  2.780
  2.790
  2.790
  2.800
  2.800
  2.800
Adjusted equity ratio
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,461
  5,657
  7,012
  8,527
  10,201
  12,033
  14,021
  16,160
  18,448
  20,881
  25,074
  27,787
  30,636
  33,620
  36,739
  39,991
  43,379
  46,905
  50,571
  54,381
  58,341
  62,455
  66,731
  71,176
  75,798
  80,606
  85,609
  90,819
  96,245
  101,900
Depreciation, amort., depletion, $m
  2,784
  2,916
  3,066
  3,234
  3,421
  3,627
  3,850
  4,090
  4,349
  4,623
  2,697
  3,004
  3,328
  3,667
  4,021
  4,391
  4,777
  5,178
  5,595
  6,029
  6,480
  6,949
  7,436
  7,942
  8,469
  9,016
  9,586
  10,179
  10,797
  11,440
Funds from operations, $m
  7,244
  8,573
  10,078
  11,762
  13,623
  15,660
  17,870
  20,250
  22,796
  25,504
  27,771
  30,791
  33,964
  37,287
  40,760
  44,382
  48,156
  52,083
  56,166
  60,410
  64,821
  69,404
  74,168
  79,119
  84,267
  89,622
  95,195
  100,997
  107,041
  113,340
Change in working capital, $m
  883
  1,018
  1,157
  1,298
  1,439
  1,580
  1,719
  1,855
  1,988
  2,117
  2,244
  2,368
  2,490
  2,611
  2,730
  2,849
  2,969
  3,091
  3,215
  3,342
  3,474
  3,610
  3,751
  3,899
  4,054
  4,217
  4,387
  4,567
  4,757
  4,957
Cash from operations, $m
  6,362
  7,555
  8,922
  10,464
  12,183
  14,080
  16,152
  18,396
  20,809
  23,387
  25,527
  28,423
  31,474
  34,676
  38,030
  41,533
  45,186
  48,991
  52,951
  57,068
  61,347
  65,795
  70,416
  75,220
  80,213
  85,406
  90,808
  96,430
  102,284
  108,383
Maintenance CAPEX, $m
  -451
  -566
  -698
  -848
  -1,017
  -1,203
  -1,409
  -1,632
  -1,873
  -2,131
  -2,406
  -2,697
  -3,004
  -3,328
  -3,667
  -4,021
  -4,391
  -4,777
  -5,178
  -5,595
  -6,029
  -6,480
  -6,949
  -7,436
  -7,942
  -8,469
  -9,016
  -9,586
  -10,179
  -10,797
New CAPEX, $m
  -3,208
  -3,700
  -4,206
  -4,719
  -5,233
  -5,744
  -6,248
  -6,742
  -7,226
  -7,698
  -8,159
  -8,610
  -9,053
  -9,491
  -9,925
  -10,359
  -10,795
  -11,238
  -11,689
  -12,151
  -12,628
  -13,123
  -13,638
  -14,175
  -14,738
  -15,329
  -15,950
  -16,604
  -17,293
  -18,020
Cash from investing activities, $m
  -3,659
  -4,266
  -4,904
  -5,567
  -6,250
  -6,947
  -7,657
  -8,374
  -9,099
  -9,829
  -10,565
  -11,307
  -12,057
  -12,819
  -13,592
  -14,380
  -15,186
  -16,015
  -16,867
  -17,746
  -18,657
  -19,603
  -20,587
  -21,611
  -22,680
  -23,798
  -24,966
  -26,190
  -27,472
  -28,817
Free cash flow, $m
  2,702
  3,289
  4,018
  4,897
  5,934
  7,132
  8,495
  10,022
  11,710
  13,558
  14,962
  17,116
  19,416
  21,858
  24,438
  27,153
  30,000
  32,977
  36,084
  39,321
  42,690
  46,191
  49,830
  53,608
  57,532
  61,608
  65,841
  70,240
  74,812
  79,567
Issuance/(repayment) of debt, $m
  8,578
  9,871
  11,219
  12,587
  13,960
  15,323
  16,667
  17,986
  19,276
  20,535
  21,764
  22,968
  24,150
  25,317
  26,475
  27,633
  28,798
  29,977
  31,180
  32,414
  33,687
  35,007
  36,380
  37,814
  39,316
  40,892
  42,549
  44,294
  46,132
  48,070
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  
  8,578
  9,871
  11,219
  12,587
  13,960
  15,323
  16,667
  17,986
  19,276
  20,535
  21,764
  22,968
  24,150
  25,317
  26,475
  27,633
  28,798
  29,977
  31,180
  32,414
  33,687
  35,007
  36,380
  37,814
  39,316
  40,892
  42,549
  44,294
  46,132
  48,070
Total cash flow (excl. dividends), $m
  11,280
  13,160
  15,237
  17,484
  19,893
  22,455
  25,162
  28,008
  30,986
  34,093
  36,727
  40,084
  43,566
  47,175
  50,914
  54,786
  58,797
  62,955
  67,265
  71,736
  76,377
  81,198
  86,209
  91,422
  96,848
  102,500
  108,390
  114,533
  120,944
  127,637
Retained Cash Flow (-), $m
  -2,960
  -3,432
  -3,901
  -4,377
  -4,854
  -5,328
  -5,795
  -6,254
  -6,702
  -7,140
  -7,568
  -7,986
  -8,397
  -8,803
  -9,206
  -9,608
  -10,013
  -10,423
  -10,842
  -11,271
  -11,713
  -12,172
  -12,650
  -13,148
  -13,670
  -14,218
  -14,795
  -15,401
  -16,040
  -16,714
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
  8,320
  9,728
  11,336
  13,108
  15,039
  17,127
  19,367
  21,754
  24,284
  26,953
  29,159
  32,098
  35,169
  38,372
  41,708
  45,178
  48,784
  52,531
  56,423
  60,465
  64,664
  69,026
  73,560
  78,274
  83,178
  88,281
  93,596
  99,132
  104,903
  110,922
Discount rate, %
  6.90
  7.25
  7.61
  7.99
  8.39
  8.81
  9.25
  9.71
  10.19
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.61
  17.44
  18.31
  19.22
  20.18
  21.19
  22.25
  23.37
  24.53
  25.76
  27.05
  28.40
PV of cash for distribution, $m
  7,783
  8,458
  9,098
  9,639
  10,054
  10,322
  10,428
  10,366
  10,136
  9,749
  9,035
  8,416
  7,702
  6,924
  6,110
  5,290
  4,492
  3,738
  3,046
  2,429
  1,894
  1,442
  1,072
  776
  548
  376
  250
  162
  101
  61
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

General Dynamics Corporation is a global aerospace and defense company. The Company offers a portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; information technology (IT) services and C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) solutions, and shipbuilding and ship repair. It operates through four business groups: Aerospace, Combat Systems, Information Systems and Technology, and Marine Systems. Its Aerospace group offers aircraft design; cockpit and cabin systems, and product service and support. Its Combat Systems group offers combat vehicles, weapons systems and munitions. The Information Systems and Technology group provides technologies, products and services in support of various programs. The Marine Systems group is a designer and builder of nuclear-powered submarines, surface combatants and auxiliary and combat-logistics ships.

FINANCIAL RATIOS  of  General Dynamics Corporation (GD)

Valuation Ratios
P/E Ratio 17.5
Price to Sales 1.7
Price to Book 5
Price to Tangible Book
Price to Cash Flow 24.2
Price to Free Cash Flow 29.6
Growth Rates
Sales Growth Rate -0.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -31.1%
Cap. Spend. - 3 Yr. Gr. Rate -2.1%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 29%
Total Debt to Equity 37.7%
Interest Coverage 52
Management Effectiveness
Return On Assets 9.3%
Ret/ On Assets - 3 Yr. Avg. 8.5%
Return On Total Capital 20.9%
Ret/ On T. Cap. - 3 Yr. Avg. 18.5%
Return On Equity 28.1%
Return On Equity - 3 Yr. Avg. 24.5%
Asset Turnover 1
Profitability Ratios
Gross Margin 19.9%
Gross Margin - 3 Yr. Avg. 19.5%
EBITDA Margin 15.2%
EBITDA Margin - 3 Yr. Avg. 14.8%
Operating Margin 13.7%
Oper. Margin - 3 Yr. Avg. 13.2%
Pre-Tax Margin 13.5%
Pre-Tax Margin - 3 Yr. Avg. 13%
Net Profit Margin 9.4%
Net Profit Margin - 3 Yr. Avg. 9%
Effective Tax Rate 27.6%
Eff/ Tax Rate - 3 Yr. Avg. 28.3%
Payout Ratio 30.8%

GD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GD stock intrinsic value calculation we used $36193 million for the last fiscal year's total revenue generated by General Dynamics Corporation. The default revenue input number comes from 0001 income statement of General Dynamics 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 GD stock valuation model: a) initial revenue growth rate of 25.4% 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 6.9%, whose default value for GD is calculated based on our internal credit rating of General Dynamics 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 General Dynamics 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 GD stock the variable cost ratio is equal to 86.3%.

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 GD 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 General Dynamics Corporation.

Corporate tax rate of 27% is the nominal tax rate for General Dynamics 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 GD 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 GD are equal to 34.9%.

Life of production assets of 28 years is the average useful life of capital assets used in General Dynamics 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 GD is equal to 9.6%. 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 - $11732 million for General Dynamics 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 288.238 million for General Dynamics 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 General Dynamics Corporation at the current share price and the inputted number of shares is $49.5 billion.

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