Intrinsic value of Eli Lilly and Company - LLY

Previous Close

$125.24

  Intrinsic Value

$84.19

stock screener

  Rating & Target

sell

-33%

Previous close

$125.24

 
Intrinsic value

$84.19

 
Up/down potential

-33%

 
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 129.7

 

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, %
  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
  4.87
  4.89
  4.90
  4.91
  4.92
  4.92
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
Revenue, $m
  25,661
  26,829
  28,061
  29,362
  30,734
  32,180
  33,703
  35,308
  36,997
  38,776
  40,647
  42,615
  44,686
  46,863
  49,153
  51,560
  54,090
  56,750
  59,545
  62,482
  65,568
  68,810
  72,217
  75,796
  79,555
  83,504
  87,653
  92,010
  96,586
  101,393
Variable operating expenses, $m
  4,609
  4,783
  4,967
  5,161
  5,365
  5,580
  5,807
  6,046
  6,298
  6,563
  6,055
  6,348
  6,656
  6,981
  7,322
  7,680
  8,057
  8,453
  8,869
  9,307
  9,767
  10,250
  10,757
  11,290
  11,850
  12,438
  13,056
  13,705
  14,387
  15,103
Fixed operating expenses, $m
  17,275
  17,655
  18,043
  18,440
  18,846
  19,261
  19,684
  20,117
  20,560
  21,012
  21,475
  21,947
  22,430
  22,923
  23,428
  23,943
  24,470
  25,008
  25,558
  26,121
  26,695
  27,282
  27,883
  28,496
  29,123
  29,764
  30,419
  31,088
  31,772
  32,471
Total operating expenses, $m
  21,884
  22,438
  23,010
  23,601
  24,211
  24,841
  25,491
  26,163
  26,858
  27,575
  27,530
  28,295
  29,086
  29,904
  30,750
  31,623
  32,527
  33,461
  34,427
  35,428
  36,462
  37,532
  38,640
  39,786
  40,973
  42,202
  43,475
  44,793
  46,159
  47,574
Operating income, $m
  3,777
  4,391
  5,051
  5,761
  6,523
  7,339
  8,212
  9,144
  10,140
  11,201
  13,118
  14,321
  15,600
  16,960
  18,404
  19,937
  21,563
  23,288
  25,117
  27,054
  29,106
  31,278
  33,577
  36,009
  38,582
  41,302
  44,178
  47,217
  50,428
  53,819
EBITDA, $m
  5,840
  6,511
  7,233
  8,008
  8,838
  9,726
  10,674
  11,687
  12,766
  13,915
  15,139
  16,439
  17,822
  19,289
  20,848
  22,500
  24,253
  26,110
  28,077
  30,160
  32,366
  34,699
  37,167
  39,778
  42,537
  45,454
  48,536
  51,791
  55,229
  58,860
Interest expense (income), $m
  146
  690
  773
  860
  953
  1,050
  1,153
  1,262
  1,376
  1,496
  1,623
  1,756
  1,896
  2,044
  2,199
  2,362
  2,534
  2,714
  2,904
  3,103
  3,313
  3,533
  3,764
  4,007
  4,263
  4,531
  4,813
  5,109
  5,420
  5,747
  6,090
Earnings before tax, $m
  3,087
  3,618
  4,191
  4,808
  5,473
  6,186
  6,950
  7,769
  8,643
  9,578
  11,362
  12,424
  13,556
  14,761
  16,041
  17,403
  18,849
  20,384
  22,013
  23,741
  25,573
  27,514
  29,570
  31,747
  34,051
  36,489
  39,069
  41,797
  44,681
  47,729
Tax expense, $m
  834
  977
  1,132
  1,298
  1,478
  1,670
  1,877
  2,098
  2,334
  2,586
  3,068
  3,355
  3,660
  3,985
  4,331
  4,699
  5,089
  5,504
  5,944
  6,410
  6,905
  7,429
  7,984
  8,572
  9,194
  9,852
  10,549
  11,285
  12,064
  12,887
Net income, $m
  2,254
  2,641
  3,059
  3,510
  3,995
  4,516
  5,074
  5,671
  6,310
  6,992
  8,294
  9,070
  9,896
  10,775
  11,710
  12,704
  13,760
  14,881
  16,070
  17,331
  18,668
  20,085
  21,586
  23,175
  24,857
  26,637
  28,520
  30,512
  32,617
  34,843

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
  45,905
  47,994
  50,199
  52,526
  54,980
  57,567
  60,292
  63,163
  66,185
  69,366
  72,713
  76,235
  79,939
  83,834
  87,930
  92,236
  96,762
  101,520
  106,520
  111,774
  117,294
  123,095
  129,189
  135,591
  142,317
  149,382
  156,802
  164,597
  172,784
  181,382
Adjusted assets (=assets-cash), $m
  45,905
  47,994
  50,199
  52,526
  54,980
  57,567
  60,292
  63,163
  66,185
  69,366
  72,713
  76,235
  79,939
  83,834
  87,930
  92,236
  96,762
  101,520
  106,520
  111,774
  117,294
  123,095
  129,189
  135,591
  142,317
  149,382
  156,802
  164,597
  172,784
  181,382
Revenue / Adjusted assets
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
Average production assets, $m
  13,523
  14,139
  14,788
  15,474
  16,197
  16,959
  17,762
  18,607
  19,498
  20,435
  21,421
  22,458
  23,549
  24,697
  25,904
  27,172
  28,506
  29,907
  31,380
  32,928
  34,554
  36,263
  38,058
  39,944
  41,926
  44,007
  46,193
  48,489
  50,901
  53,434
Working capital, $m
  1,771
  1,851
  1,936
  2,026
  2,121
  2,220
  2,326
  2,436
  2,553
  2,676
  2,805
  2,940
  3,083
  3,234
  3,392
  3,558
  3,732
  3,916
  4,109
  4,311
  4,524
  4,748
  4,983
  5,230
  5,489
  5,762
  6,048
  6,349
  6,664
  6,996
Total debt, $m
  14,314
  15,934
  17,646
  19,452
  21,356
  23,363
  25,478
  27,705
  30,051
  32,519
  35,117
  37,849
  40,724
  43,747
  46,925
  50,266
  53,779
  57,471
  61,350
  65,428
  69,712
  74,213
  78,942
  83,910
  89,129
  94,611
  100,370
  106,418
  112,771
  119,444
Total liabilities, $m
  35,622
  37,243
  38,955
  40,760
  42,665
  44,672
  46,787
  49,014
  51,359
  53,828
  56,426
  59,158
  62,033
  65,055
  68,234
  71,575
  75,088
  78,779
  82,659
  86,736
  91,021
  95,522
  100,251
  105,219
  110,438
  115,920
  121,679
  127,727
  134,080
  140,753
Total equity, $m
  10,283
  10,751
  11,245
  11,766
  12,316
  12,895
  13,505
  14,148
  14,825
  15,538
  16,288
  17,077
  17,906
  18,779
  19,696
  20,661
  21,675
  22,740
  23,860
  25,037
  26,274
  27,573
  28,938
  30,372
  31,879
  33,461
  35,124
  36,870
  38,704
  40,630
Total liabilities and equity, $m
  45,905
  47,994
  50,200
  52,526
  54,981
  57,567
  60,292
  63,162
  66,184
  69,366
  72,714
  76,235
  79,939
  83,834
  87,930
  92,236
  96,763
  101,519
  106,519
  111,773
  117,295
  123,095
  129,189
  135,591
  142,317
  149,381
  156,803
  164,597
  172,784
  181,383
Debt-to-equity ratio
  1.390
  1.480
  1.570
  1.650
  1.730
  1.810
  1.890
  1.960
  2.030
  2.090
  2.160
  2.220
  2.270
  2.330
  2.380
  2.430
  2.480
  2.530
  2.570
  2.610
  2.650
  2.690
  2.730
  2.760
  2.800
  2.830
  2.860
  2.890
  2.910
  2.940
Adjusted equity ratio
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,254
  2,641
  3,059
  3,510
  3,995
  4,516
  5,074
  5,671
  6,310
  6,992
  8,294
  9,070
  9,896
  10,775
  11,710
  12,704
  13,760
  14,881
  16,070
  17,331
  18,668
  20,085
  21,586
  23,175
  24,857
  26,637
  28,520
  30,512
  32,617
  34,843
Depreciation, amort., depletion, $m
  2,063
  2,121
  2,182
  2,247
  2,315
  2,387
  2,463
  2,542
  2,626
  2,715
  2,021
  2,119
  2,222
  2,330
  2,444
  2,563
  2,689
  2,821
  2,960
  3,106
  3,260
  3,421
  3,590
  3,768
  3,955
  4,152
  4,358
  4,574
  4,802
  5,041
Funds from operations, $m
  4,316
  4,762
  5,241
  5,757
  6,310
  6,902
  7,536
  8,213
  8,936
  9,707
  10,315
  11,188
  12,118
  13,105
  14,154
  15,268
  16,449
  17,702
  19,030
  20,437
  21,928
  23,506
  25,176
  26,943
  28,812
  30,789
  32,878
  35,086
  37,419
  39,883
Change in working capital, $m
  76
  81
  85
  90
  95
  100
  105
  111
  117
  123
  129
  136
  143
  150
  158
  166
  175
  183
  193
  203
  213
  224
  235
  247
  259
  272
  286
  301
  316
  332
Cash from operations, $m
  4,240
  4,681
  5,156
  5,667
  6,215
  6,803
  7,431
  8,103
  8,819
  9,584
  10,186
  11,053
  11,975
  12,955
  13,996
  15,101
  16,274
  17,519
  18,837
  20,235
  21,715
  23,282
  24,941
  26,696
  28,553
  30,516
  32,592
  34,785
  37,103
  39,552
Maintenance CAPEX, $m
  -1,221
  -1,276
  -1,334
  -1,395
  -1,460
  -1,528
  -1,600
  -1,676
  -1,755
  -1,839
  -1,928
  -2,021
  -2,119
  -2,222
  -2,330
  -2,444
  -2,563
  -2,689
  -2,821
  -2,960
  -3,106
  -3,260
  -3,421
  -3,590
  -3,768
  -3,955
  -4,152
  -4,358
  -4,574
  -4,802
New CAPEX, $m
  -583
  -615
  -650
  -686
  -723
  -762
  -803
  -846
  -890
  -937
  -986
  -1,037
  -1,091
  -1,148
  -1,207
  -1,269
  -1,333
  -1,402
  -1,473
  -1,548
  -1,626
  -1,709
  -1,795
  -1,886
  -1,981
  -2,081
  -2,186
  -2,296
  -2,412
  -2,533
Cash from investing activities, $m
  -1,804
  -1,891
  -1,984
  -2,081
  -2,183
  -2,290
  -2,403
  -2,522
  -2,645
  -2,776
  -2,914
  -3,058
  -3,210
  -3,370
  -3,537
  -3,713
  -3,896
  -4,091
  -4,294
  -4,508
  -4,732
  -4,969
  -5,216
  -5,476
  -5,749
  -6,036
  -6,338
  -6,654
  -6,986
  -7,335
Free cash flow, $m
  2,436
  2,790
  3,173
  3,586
  4,033
  4,513
  5,028
  5,581
  6,174
  6,807
  7,272
  7,994
  8,765
  9,586
  10,460
  11,389
  12,378
  13,428
  14,543
  15,727
  16,982
  18,314
  19,725
  21,220
  22,803
  24,480
  26,254
  28,131
  30,117
  32,217
Issuance/(repayment) of debt, $m
  1,543
  1,621
  1,711
  1,806
  1,904
  2,007
  2,115
  2,227
  2,345
  2,468
  2,598
  2,733
  2,874
  3,023
  3,178
  3,341
  3,512
  3,692
  3,880
  4,077
  4,284
  4,501
  4,729
  4,968
  5,219
  5,482
  5,759
  6,049
  6,353
  6,672
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  
  1,543
  1,621
  1,711
  1,806
  1,904
  2,007
  2,115
  2,227
  2,345
  2,468
  2,598
  2,733
  2,874
  3,023
  3,178
  3,341
  3,512
  3,692
  3,880
  4,077
  4,284
  4,501
  4,729
  4,968
  5,219
  5,482
  5,759
  6,049
  6,353
  6,672
Total cash flow (excl. dividends), $m
  3,979
  4,411
  4,884
  5,392
  5,937
  6,520
  7,143
  7,809
  8,519
  9,276
  9,869
  10,727
  11,639
  12,608
  13,638
  14,731
  15,890
  17,120
  18,423
  19,804
  21,266
  22,815
  24,454
  26,188
  28,022
  29,962
  32,013
  34,180
  36,470
  38,889
Retained Cash Flow (-), $m
  -454
  -468
  -494
  -521
  -550
  -579
  -610
  -643
  -677
  -713
  -750
  -789
  -830
  -873
  -917
  -965
  -1,014
  -1,066
  -1,120
  -1,177
  -1,237
  -1,299
  -1,365
  -1,434
  -1,507
  -1,583
  -1,662
  -1,746
  -1,834
  -1,926
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
  3,525
  3,943
  4,390
  4,871
  5,387
  5,941
  6,533
  7,166
  7,842
  8,563
  9,120
  9,938
  10,809
  11,736
  12,720
  13,766
  14,876
  16,054
  17,303
  18,627
  20,030
  21,516
  23,089
  24,754
  26,516
  28,380
  30,350
  32,434
  34,636
  36,963
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
  3,379
  3,610
  3,821
  4,011
  4,176
  4,311
  4,413
  4,479
  4,505
  4,489
  4,331
  4,241
  4,110
  3,940
  3,735
  3,498
  3,237
  2,956
  2,664
  2,367
  2,072
  1,785
  1,513
  1,261
  1,032
  828
  651
  502
  378
  278
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 and Company (LLY)

Valuation Ratios
P/E Ratio 50.4
Price to Sales 6.5
Price to Book 9.8
Price to Tangible Book
Price to Cash Flow 28.4
Price to Free Cash Flow 36.7
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 $24556 million for the last fiscal year's total revenue generated by Eli Lilly and Company. The default revenue input number comes from 0001 income statement of Eli Lilly and Company. 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 4.5% 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 and Company, 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 and Company.
    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 18.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $16903 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 and Company.

Corporate tax rate of 27% is the nominal tax rate for Eli Lilly and Company. 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 52.7%.

Life of production assets of 10.6 years is the average useful life of capital assets used in Eli Lilly and Company 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 6.9%. 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 - $9828.7 million for Eli Lilly and Company - 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 1035.420 million for Eli Lilly and Company 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 and Company at the current share price and the inputted number of shares is $129.7 billion.

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