Intrinsic value of Eli Lilly - LLY

Previous Close

$113.58

  Intrinsic Value

$61.76

stock screener

  Rating & Target

sell

-46%

Previous close

$113.58

 
Intrinsic value

$61.76

 
Up/down potential

-46%

 
Rating

sell

We calculate the intrinsic value of LLY 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 122.0

 

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, %
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.84
  5.76
  5.68
  5.62
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
  5.24
  5.21
  5.19
Revenue, $m
  24,953
  27,121
  29,378
  31,725
  34,164
  36,700
  39,334
  42,072
  44,918
  47,878
  50,956
  54,160
  57,495
  60,969
  64,589
  68,364
  72,301
  76,411
  80,701
  85,184
  89,867
  94,764
  99,885
  105,242
  110,848
  116,717
  122,862
  129,298
  136,040
  143,105
Variable operating expenses, $m
  20,909
  22,653
  24,468
  26,355
  28,317
  30,357
  32,476
  34,678
  36,967
  39,347
  40,983
  43,559
  46,242
  49,036
  51,947
  54,983
  58,150
  61,455
  64,906
  68,511
  72,278
  76,216
  80,335
  84,643
  89,152
  93,872
  98,815
  103,991
  109,414
  115,096
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
  20,909
  22,653
  24,468
  26,355
  28,317
  30,357
  32,476
  34,678
  36,967
  39,347
  40,983
  43,559
  46,242
  49,036
  51,947
  54,983
  58,150
  61,455
  64,906
  68,511
  72,278
  76,216
  80,335
  84,643
  89,152
  93,872
  98,815
  103,991
  109,414
  115,096
Operating income, $m
  4,044
  4,468
  4,910
  5,369
  5,847
  6,343
  6,859
  7,395
  7,952
  8,531
  9,973
  10,600
  11,253
  11,933
  12,642
  13,380
  14,151
  14,955
  15,795
  16,672
  17,589
  18,548
  19,550
  20,598
  21,696
  22,844
  24,047
  25,307
  26,626
  28,009
EBITDA, $m
  6,168
  6,704
  7,262
  7,843
  8,446
  9,072
  9,724
  10,401
  11,104
  11,836
  12,597
  13,389
  14,213
  15,072
  15,967
  16,900
  17,873
  18,889
  19,950
  21,058
  22,216
  23,426
  24,692
  26,016
  27,402
  28,853
  30,372
  31,963
  33,630
  35,376
Interest expense (income), $m
  146
  737
  902
  1,073
  1,251
  1,436
  1,629
  1,829
  2,036
  2,252
  2,477
  2,710
  2,953
  3,206
  3,469
  3,743
  4,028
  4,326
  4,637
  4,961
  5,299
  5,653
  6,022
  6,408
  6,812
  7,235
  7,677
  8,140
  8,625
  9,132
  9,664
Earnings before tax, $m
  3,307
  3,566
  3,837
  4,118
  4,411
  4,714
  5,030
  5,358
  5,699
  6,054
  7,263
  7,647
  8,047
  8,464
  8,899
  9,352
  9,825
  10,319
  10,834
  11,373
  11,936
  12,525
  13,141
  13,786
  14,461
  15,167
  15,907
  16,682
  17,494
  18,345
Tax expense, $m
  893
  963
  1,036
  1,112
  1,191
  1,273
  1,358
  1,447
  1,539
  1,635
  1,961
  2,065
  2,173
  2,285
  2,403
  2,525
  2,653
  2,786
  2,925
  3,071
  3,223
  3,382
  3,548
  3,722
  3,904
  4,095
  4,295
  4,504
  4,723
  4,953
Net income, $m
  2,414
  2,603
  2,801
  3,006
  3,220
  3,442
  3,672
  3,912
  4,161
  4,419
  5,302
  5,583
  5,875
  6,179
  6,496
  6,827
  7,172
  7,533
  7,909
  8,302
  8,714
  9,144
  9,593
  10,064
  10,556
  11,072
  11,612
  12,178
  12,771
  13,392

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
  49,119
  53,388
  57,830
  62,450
  67,253
  72,243
  77,430
  82,820
  88,422
  94,248
  100,308
  106,614
  113,179
  120,017
  127,144
  134,574
  142,325
  150,415
  158,861
  167,684
  176,904
  186,543
  196,623
  207,169
  218,205
  229,757
  241,854
  254,523
  267,796
  281,702
Adjusted assets (=assets-cash), $m
  49,119
  53,388
  57,830
  62,450
  67,253
  72,243
  77,430
  82,820
  88,422
  94,248
  100,308
  106,614
  113,179
  120,017
  127,144
  134,574
  142,325
  150,415
  158,861
  167,684
  176,904
  186,543
  196,623
  207,169
  218,205
  229,757
  241,854
  254,523
  267,796
  281,702
Revenue / Adjusted assets
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
Average production assets, $m
  13,874
  15,079
  16,334
  17,639
  18,995
  20,405
  21,870
  23,392
  24,975
  26,620
  28,332
  30,113
  31,967
  33,899
  35,911
  38,010
  40,200
  42,484
  44,870
  47,362
  49,966
  52,689
  55,536
  58,514
  61,632
  64,895
  68,311
  71,890
  75,638
  79,566
Working capital, $m
  374
  407
  441
  476
  512
  550
  590
  631
  674
  718
  764
  812
  862
  915
  969
  1,025
  1,085
  1,146
  1,211
  1,278
  1,348
  1,421
  1,498
  1,579
  1,663
  1,751
  1,843
  1,939
  2,041
  2,147
Total debt, $m
  16,705
  19,872
  23,168
  26,596
  30,160
  33,863
  37,711
  41,710
  45,868
  50,190
  54,687
  59,366
  64,237
  69,311
  74,599
  80,112
  85,864
  91,866
  98,133
  104,680
  111,521
  118,673
  126,153
  133,978
  142,166
  150,738
  159,714
  169,115
  178,963
  189,282
Total liabilities, $m
  36,446
  39,614
  42,910
  46,338
  49,901
  53,605
  57,453
  61,452
  65,609
  69,932
  74,428
  79,107
  83,979
  89,053
  94,341
  99,854
  105,605
  111,608
  117,875
  124,422
  131,263
  138,415
  145,894
  153,719
  161,908
  170,480
  179,456
  188,856
  198,704
  209,023
Total equity, $m
  12,673
  13,774
  14,920
  16,112
  17,351
  18,639
  19,977
  21,367
  22,813
  24,316
  25,879
  27,506
  29,200
  30,964
  32,803
  34,720
  36,720
  38,807
  40,986
  43,262
  45,641
  48,128
  50,729
  53,450
  56,297
  59,277
  62,398
  65,667
  69,091
  72,679
Total liabilities and equity, $m
  49,119
  53,388
  57,830
  62,450
  67,252
  72,244
  77,430
  82,819
  88,422
  94,248
  100,307
  106,613
  113,179
  120,017
  127,144
  134,574
  142,325
  150,415
  158,861
  167,684
  176,904
  186,543
  196,623
  207,169
  218,205
  229,757
  241,854
  254,523
  267,795
  281,702
Debt-to-equity ratio
  1.320
  1.440
  1.550
  1.650
  1.740
  1.820
  1.890
  1.950
  2.010
  2.060
  2.110
  2.160
  2.200
  2.240
  2.270
  2.310
  2.340
  2.370
  2.390
  2.420
  2.440
  2.470
  2.490
  2.510
  2.530
  2.540
  2.560
  2.580
  2.590
  2.600
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
  2,414
  2,603
  2,801
  3,006
  3,220
  3,442
  3,672
  3,912
  4,161
  4,419
  5,302
  5,583
  5,875
  6,179
  6,496
  6,827
  7,172
  7,533
  7,909
  8,302
  8,714
  9,144
  9,593
  10,064
  10,556
  11,072
  11,612
  12,178
  12,771
  13,392
Depreciation, amort., depletion, $m
  2,125
  2,236
  2,352
  2,473
  2,599
  2,729
  2,865
  3,006
  3,152
  3,305
  2,623
  2,788
  2,960
  3,139
  3,325
  3,519
  3,722
  3,934
  4,155
  4,385
  4,627
  4,879
  5,142
  5,418
  5,707
  6,009
  6,325
  6,656
  7,004
  7,367
Funds from operations, $m
  4,539
  4,840
  5,153
  5,479
  5,819
  6,171
  6,537
  6,917
  7,313
  7,724
  7,925
  8,371
  8,835
  9,318
  9,821
  10,346
  10,894
  11,466
  12,064
  12,688
  13,340
  14,022
  14,735
  15,482
  16,263
  17,081
  17,937
  18,834
  19,774
  20,759
Change in working capital, $m
  31
  33
  34
  35
  37
  38
  40
  41
  43
  44
  46
  48
  50
  52
  54
  57
  59
  62
  64
  67
  70
  73
  77
  80
  84
  88
  92
  97
  101
  106
Cash from operations, $m
  4,507
  4,807
  5,119
  5,444
  5,782
  6,133
  6,497
  6,876
  7,270
  7,680
  7,879
  8,323
  8,784
  9,266
  9,767
  10,290
  10,835
  11,405
  11,999
  12,621
  13,270
  13,949
  14,659
  15,402
  16,179
  16,993
  17,845
  18,738
  19,673
  20,653
Maintenance CAPEX, $m
  -1,178
  -1,285
  -1,396
  -1,512
  -1,633
  -1,759
  -1,889
  -2,025
  -2,166
  -2,312
  -2,465
  -2,623
  -2,788
  -2,960
  -3,139
  -3,325
  -3,519
  -3,722
  -3,934
  -4,155
  -4,385
  -4,627
  -4,879
  -5,142
  -5,418
  -5,707
  -6,009
  -6,325
  -6,656
  -7,004
New CAPEX, $m
  -1,152
  -1,206
  -1,255
  -1,305
  -1,356
  -1,410
  -1,465
  -1,522
  -1,582
  -1,645
  -1,712
  -1,781
  -1,854
  -1,932
  -2,013
  -2,099
  -2,189
  -2,285
  -2,386
  -2,492
  -2,604
  -2,722
  -2,847
  -2,979
  -3,117
  -3,263
  -3,417
  -3,578
  -3,749
  -3,928
Cash from investing activities, $m
  -2,330
  -2,491
  -2,651
  -2,817
  -2,989
  -3,169
  -3,354
  -3,547
  -3,748
  -3,957
  -4,177
  -4,404
  -4,642
  -4,892
  -5,152
  -5,424
  -5,708
  -6,007
  -6,320
  -6,647
  -6,989
  -7,349
  -7,726
  -8,121
  -8,535
  -8,970
  -9,426
  -9,903
  -10,405
  -10,932
Free cash flow, $m
  2,178
  2,317
  2,468
  2,627
  2,792
  2,964
  3,143
  3,329
  3,522
  3,722
  3,703
  3,918
  4,142
  4,374
  4,615
  4,866
  5,127
  5,398
  5,680
  5,974
  6,280
  6,600
  6,933
  7,281
  7,644
  8,023
  8,420
  8,834
  9,268
  9,722
Issuance/(repayment) of debt, $m
  3,058
  3,167
  3,296
  3,428
  3,563
  3,703
  3,848
  3,999
  4,157
  4,323
  4,496
  4,679
  4,871
  5,074
  5,288
  5,513
  5,751
  6,002
  6,267
  6,547
  6,841
  7,152
  7,480
  7,825
  8,189
  8,572
  8,976
  9,401
  9,848
  10,319
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  
  3,058
  3,167
  3,296
  3,428
  3,563
  3,703
  3,848
  3,999
  4,157
  4,323
  4,496
  4,679
  4,871
  5,074
  5,288
  5,513
  5,751
  6,002
  6,267
  6,547
  6,841
  7,152
  7,480
  7,825
  8,189
  8,572
  8,976
  9,401
  9,848
  10,319
Total cash flow (excl. dividends), $m
  5,235
  5,484
  5,765
  6,055
  6,356
  6,668
  6,991
  7,328
  7,679
  8,045
  8,199
  8,597
  9,013
  9,448
  9,903
  10,379
  10,878
  11,400
  11,947
  12,521
  13,122
  13,752
  14,413
  15,106
  15,833
  16,595
  17,395
  18,235
  19,116
  20,041
Retained Cash Flow (-), $m
  -1,081
  -1,101
  -1,146
  -1,192
  -1,239
  -1,288
  -1,338
  -1,391
  -1,445
  -1,503
  -1,563
  -1,627
  -1,694
  -1,764
  -1,839
  -1,917
  -2,000
  -2,087
  -2,179
  -2,276
  -2,379
  -2,487
  -2,601
  -2,721
  -2,847
  -2,981
  -3,121
  -3,269
  -3,424
  -3,588
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
  4,155
  4,383
  4,619
  4,863
  5,117
  5,380
  5,653
  5,938
  6,234
  6,542
  6,636
  6,970
  7,319
  7,684
  8,065
  8,462
  8,878
  9,313
  9,768
  10,244
  10,743
  11,265
  11,812
  12,385
  12,985
  13,615
  14,274
  14,966
  15,692
  16,453
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
  3,984
  4,012
  4,019
  4,004
  3,966
  3,904
  3,819
  3,711
  3,581
  3,429
  3,151
  2,975
  2,783
  2,580
  2,368
  2,150
  1,932
  1,715
  1,504
  1,302
  1,111
  935
  774
  631
  505
  397
  306
  232
  171
  124
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

Eli Lilly and Company is engaged in drug manufacturing business. The Company discovers, develops, manufactures and markets products in two segments: human pharmaceutical products and animal health products. The Company's human pharmaceutical business segment sells medicines, which are discovered or developed by its scientists. Its animal health business segment operates through the Company's Elanco division, which develops, manufactures and markets products for both food animals and companion animals. The Company's human pharmaceutical products include endocrinology products, neuroscience products, oncology products, immunology products and cardiovascular products. The Company's animal health products segment includes products for food animals and products for companion animals. As of December 31, 2016, the Company manufactured and distributed its products through facilities in the United States, Puerto Rico and 14 other countries.

FINANCIAL RATIOS  of  Eli Lilly (LLY)

Valuation Ratios
P/E Ratio 45.7
Price to Sales 5.9
Price to Book 8.9
Price to Tangible Book
Price to Cash Flow 25.8
Price to Free Cash Flow 33.3
Growth Rates
Sales Growth Rate 6.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -32.8%
Cap. Spend. - 3 Yr. Gr. Rate -0%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 59.7%
Total Debt to Equity 73.6%
Interest Coverage 24
Management Effectiveness
Return On Assets 7.7%
Ret/ On Assets - 3 Yr. Avg. 7.2%
Return On Total Capital 11.7%
Ret/ On T. Cap. - 3 Yr. Avg. 10.8%
Return On Equity 19.2%
Return On Equity - 3 Yr. Avg. 16.6%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 73.4%
Gross Margin - 3 Yr. Avg. 74.3%
EBITDA Margin 23.6%
EBITDA Margin - 3 Yr. Avg. 22.8%
Operating Margin 16.3%
Oper. Margin - 3 Yr. Avg. 14.2%
Pre-Tax Margin 15.9%
Pre-Tax Margin - 3 Yr. Avg. 15.1%
Net Profit Margin 12.9%
Net Profit Margin - 3 Yr. Avg. 12.4%
Effective Tax Rate 18.9%
Eff/ Tax Rate - 3 Yr. Avg. 17.6%
Payout Ratio 78.9%

LLY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LLY stock intrinsic value calculation we used $22871.3 million for the last fiscal year's total revenue generated by Eli Lilly. The default revenue input number comes from 0001 income statement of Eli Lilly. 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 LLY stock valuation model: a) initial revenue growth rate of 9.1% 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 LLY is calculated based on our internal credit rating of Eli Lilly, 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 Eli Lilly.
    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 LLY stock the variable cost ratio is equal to 84.1%.

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 LLY 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 Eli Lilly.

Corporate tax rate of 27% is the nominal tax rate for Eli Lilly. 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 LLY 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 LLY are equal to 55.6%.

Life of production assets of 10.8 years is the average useful life of capital assets used in Eli Lilly 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 LLY is equal to 1.5%. 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 - $11592.2 million for Eli Lilly - 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 1073.99 million for Eli Lilly 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 Eli Lilly at the current share price and the inputted number of shares is $122.0 billion.

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