Intrinsic value of Medtronic plc - MDT

Previous Close

$102.76

  Intrinsic Value

$64.55

stock screener

  Rating & Target

sell

-37%

Previous close

$102.76

 
Intrinsic value

$64.55

 
Up/down potential

-37%

 
Rating

sell

We calculate the intrinsic value of MDT 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 137.8

 

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, %
  2.40
  2.66
  2.89
  3.10
  3.29
  3.46
  3.62
  3.76
  3.88
  3.99
  4.09
  4.18
  4.27
  4.34
  4.41
  4.46
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
Revenue, $m
  30,672
  31,488
  32,399
  33,405
  34,505
  35,701
  36,993
  38,382
  39,872
  41,464
  43,161
  44,967
  46,885
  48,919
  51,074
  53,355
  55,765
  58,312
  61,000
  63,836
  66,826
  69,977
  73,296
  76,792
  80,473
  84,346
  88,422
  92,709
  97,218
  101,960
Variable operating expenses, $m
  25,035
  25,538
  26,099
  26,719
  27,398
  28,135
  28,931
  29,788
  30,706
  31,687
  26,607
  27,720
  28,903
  30,157
  31,485
  32,891
  34,377
  35,947
  37,604
  39,352
  41,195
  43,138
  45,184
  47,339
  49,608
  51,996
  54,508
  57,151
  59,931
  62,854
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
  25,035
  25,538
  26,099
  26,719
  27,398
  28,135
  28,931
  29,788
  30,706
  31,687
  26,607
  27,720
  28,903
  30,157
  31,485
  32,891
  34,377
  35,947
  37,604
  39,352
  41,195
  43,138
  45,184
  47,339
  49,608
  51,996
  54,508
  57,151
  59,931
  62,854
Operating income, $m
  5,637
  5,950
  6,300
  6,686
  7,108
  7,566
  8,062
  8,594
  9,166
  9,776
  16,554
  17,247
  17,982
  18,763
  19,589
  20,464
  21,388
  22,365
  23,396
  24,484
  25,630
  26,839
  28,112
  29,453
  30,865
  32,350
  33,913
  35,558
  37,287
  39,106
EBITDA, $m
  13,209
  13,561
  13,953
  14,386
  14,860
  15,375
  15,931
  16,530
  17,171
  17,857
  18,588
  19,365
  20,191
  21,068
  21,996
  22,978
  24,016
  25,113
  26,270
  27,491
  28,779
  30,136
  31,566
  33,071
  34,656
  36,325
  38,080
  39,926
  41,868
  43,910
Interest expense (income), $m
  0
  1,391
  1,439
  1,496
  1,559
  1,629
  1,706
  1,789
  1,879
  1,976
  2,079
  2,190
  2,308
  2,434
  2,567
  2,709
  2,859
  3,017
  3,185
  3,362
  3,549
  3,746
  3,954
  4,174
  4,405
  4,648
  4,904
  5,173
  5,457
  5,755
  6,069
Earnings before tax, $m
  4,246
  4,511
  4,804
  5,126
  5,478
  5,860
  6,272
  6,715
  7,190
  7,697
  14,364
  14,938
  15,548
  16,195
  16,880
  17,605
  18,371
  19,180
  20,034
  20,934
  21,884
  22,885
  23,939
  25,048
  26,217
  27,446
  28,740
  30,101
  31,532
  33,037
Tax expense, $m
  1,147
  1,218
  1,297
  1,384
  1,479
  1,582
  1,694
  1,813
  1,941
  2,078
  3,878
  4,033
  4,198
  4,373
  4,558
  4,753
  4,960
  5,179
  5,409
  5,652
  5,909
  6,179
  6,463
  6,763
  7,079
  7,411
  7,760
  8,127
  8,514
  8,920
Net income, $m
  3,100
  3,293
  3,507
  3,742
  3,999
  4,278
  4,579
  4,902
  5,249
  5,619
  10,486
  10,905
  11,350
  11,823
  12,323
  12,852
  13,411
  14,001
  14,625
  15,282
  15,975
  16,706
  17,475
  18,285
  19,138
  20,036
  20,980
  21,974
  23,019
  24,117

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
  90,211
  92,611
  95,291
  98,250
  101,486
  105,002
  108,802
  112,889
  117,270
  121,952
  126,944
  132,255
  137,897
  143,880
  150,219
  156,925
  164,016
  171,505
  179,411
  187,752
  196,546
  205,814
  215,577
  225,860
  236,684
  248,077
  260,064
  272,674
  285,936
  299,883
Adjusted assets (=assets-cash), $m
  90,211
  92,611
  95,291
  98,250
  101,486
  105,002
  108,802
  112,889
  117,270
  121,952
  126,944
  132,255
  137,897
  143,880
  150,219
  156,925
  164,016
  171,505
  179,411
  187,752
  196,546
  205,814
  215,577
  225,860
  236,684
  248,077
  260,064
  272,674
  285,936
  299,883
Revenue / Adjusted assets
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
Average production assets, $m
  36,131
  37,093
  38,166
  39,351
  40,647
  42,056
  43,577
  45,214
  46,969
  48,844
  50,844
  52,971
  55,230
  57,627
  60,166
  62,852
  65,692
  68,691
  71,858
  75,198
  78,720
  82,433
  86,343
  90,461
  94,797
  99,360
  104,161
  109,211
  114,523
  120,109
Working capital, $m
  3,803
  3,904
  4,017
  4,142
  4,279
  4,427
  4,587
  4,759
  4,944
  5,141
  5,352
  5,576
  5,814
  6,066
  6,333
  6,616
  6,915
  7,231
  7,564
  7,916
  8,286
  8,677
  9,089
  9,522
  9,979
  10,459
  10,964
  11,496
  12,055
  12,643
Total debt, $m
  26,655
  27,706
  28,880
  30,175
  31,593
  33,133
  34,797
  36,587
  38,506
  40,557
  42,743
  45,070
  47,541
  50,162
  52,938
  55,875
  58,981
  62,261
  65,724
  69,377
  73,229
  77,288
  81,565
  86,068
  90,810
  95,800
  101,050
  106,573
  112,382
  118,491
Total liabilities, $m
  39,513
  40,564
  41,738
  43,033
  44,451
  45,991
  47,655
  49,445
  51,364
  53,415
  55,601
  57,928
  60,399
  63,020
  65,796
  68,733
  71,839
  75,119
  78,582
  82,235
  86,087
  90,146
  94,423
  98,926
  103,668
  108,658
  113,908
  119,431
  125,240
  131,349
Total equity, $m
  50,699
  52,047
  53,554
  55,216
  57,035
  59,011
  61,146
  63,443
  65,905
  68,537
  71,342
  74,327
  77,498
  80,861
  84,423
  88,192
  92,177
  96,386
  100,829
  105,516
  110,459
  115,667
  121,155
  126,933
  133,016
  139,419
  146,156
  153,243
  160,696
  168,534
Total liabilities and equity, $m
  90,212
  92,611
  95,292
  98,249
  101,486
  105,002
  108,801
  112,888
  117,269
  121,952
  126,943
  132,255
  137,897
  143,881
  150,219
  156,925
  164,016
  171,505
  179,411
  187,751
  196,546
  205,813
  215,578
  225,859
  236,684
  248,077
  260,064
  272,674
  285,936
  299,883
Debt-to-equity ratio
  0.530
  0.530
  0.540
  0.550
  0.550
  0.560
  0.570
  0.580
  0.580
  0.590
  0.600
  0.610
  0.610
  0.620
  0.630
  0.630
  0.640
  0.650
  0.650
  0.660
  0.660
  0.670
  0.670
  0.680
  0.680
  0.690
  0.690
  0.700
  0.700
  0.700
Adjusted equity ratio
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,100
  3,293
  3,507
  3,742
  3,999
  4,278
  4,579
  4,902
  5,249
  5,619
  10,486
  10,905
  11,350
  11,823
  12,323
  12,852
  13,411
  14,001
  14,625
  15,282
  15,975
  16,706
  17,475
  18,285
  19,138
  20,036
  20,980
  21,974
  23,019
  24,117
Depreciation, amort., depletion, $m
  7,572
  7,610
  7,653
  7,701
  7,752
  7,809
  7,870
  7,935
  8,005
  8,080
  2,034
  2,119
  2,209
  2,305
  2,407
  2,514
  2,628
  2,748
  2,874
  3,008
  3,149
  3,297
  3,454
  3,618
  3,792
  3,974
  4,166
  4,368
  4,581
  4,804
Funds from operations, $m
  10,672
  10,903
  11,160
  11,443
  11,751
  12,087
  12,448
  12,837
  13,254
  13,699
  12,519
  13,024
  13,560
  14,128
  14,729
  15,366
  16,038
  16,749
  17,499
  18,290
  19,124
  20,003
  20,929
  21,904
  22,930
  24,010
  25,147
  26,342
  27,599
  28,922
Change in working capital, $m
  89
  101
  113
  125
  136
  148
  160
  172
  185
  197
  210
  224
  238
  252
  267
  283
  299
  316
  333
  352
  371
  391
  412
  433
  456
  480
  505
  532
  559
  588
Cash from operations, $m
  10,583
  10,802
  11,047
  11,318
  11,615
  11,938
  12,288
  12,665
  13,069
  13,502
  12,309
  12,800
  13,322
  13,875
  14,462
  15,083
  15,740
  16,433
  17,166
  17,938
  18,753
  19,612
  20,517
  21,470
  22,474
  23,530
  24,641
  25,811
  27,040
  28,334
Maintenance CAPEX, $m
  -1,411
  -1,445
  -1,484
  -1,527
  -1,574
  -1,626
  -1,682
  -1,743
  -1,809
  -1,879
  -1,954
  -2,034
  -2,119
  -2,209
  -2,305
  -2,407
  -2,514
  -2,628
  -2,748
  -2,874
  -3,008
  -3,149
  -3,297
  -3,454
  -3,618
  -3,792
  -3,974
  -4,166
  -4,368
  -4,581
New CAPEX, $m
  -852
  -961
  -1,073
  -1,185
  -1,296
  -1,408
  -1,522
  -1,637
  -1,755
  -1,875
  -1,999
  -2,127
  -2,260
  -2,397
  -2,539
  -2,686
  -2,840
  -3,000
  -3,166
  -3,341
  -3,522
  -3,712
  -3,911
  -4,118
  -4,335
  -4,563
  -4,801
  -5,051
  -5,312
  -5,586
Cash from investing activities, $m
  -2,263
  -2,406
  -2,557
  -2,712
  -2,870
  -3,034
  -3,204
  -3,380
  -3,564
  -3,754
  -3,953
  -4,161
  -4,379
  -4,606
  -4,844
  -5,093
  -5,354
  -5,628
  -5,914
  -6,215
  -6,530
  -6,861
  -7,208
  -7,572
  -7,953
  -8,355
  -8,775
  -9,217
  -9,680
  -10,167
Free cash flow, $m
  8,319
  8,396
  8,490
  8,606
  8,745
  8,904
  9,084
  9,285
  9,506
  9,748
  8,356
  8,639
  8,943
  9,270
  9,618
  9,990
  10,386
  10,806
  11,252
  11,724
  12,223
  12,751
  13,309
  13,898
  14,520
  15,175
  15,866
  16,594
  17,360
  18,167
Issuance/(repayment) of debt, $m
  898
  1,051
  1,174
  1,296
  1,418
  1,540
  1,664
  1,790
  1,919
  2,051
  2,187
  2,326
  2,471
  2,621
  2,776
  2,938
  3,106
  3,280
  3,463
  3,653
  3,852
  4,059
  4,277
  4,504
  4,741
  4,990
  5,250
  5,523
  5,809
  6,109
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  
  898
  1,051
  1,174
  1,296
  1,418
  1,540
  1,664
  1,790
  1,919
  2,051
  2,187
  2,326
  2,471
  2,621
  2,776
  2,938
  3,106
  3,280
  3,463
  3,653
  3,852
  4,059
  4,277
  4,504
  4,741
  4,990
  5,250
  5,523
  5,809
  6,109
Total cash flow (excl. dividends), $m
  9,217
  9,447
  9,664
  9,902
  10,162
  10,444
  10,748
  11,075
  11,425
  11,799
  10,542
  10,965
  11,414
  11,890
  12,395
  12,928
  13,491
  14,086
  14,714
  15,377
  16,075
  16,811
  17,586
  18,402
  19,261
  20,165
  21,116
  22,117
  23,169
  24,275
Retained Cash Flow (-), $m
  -1,122
  -1,349
  -1,506
  -1,663
  -1,819
  -1,976
  -2,135
  -2,297
  -2,462
  -2,631
  -2,806
  -2,985
  -3,171
  -3,363
  -3,562
  -3,769
  -3,985
  -4,209
  -4,443
  -4,687
  -4,942
  -5,209
  -5,487
  -5,779
  -6,083
  -6,403
  -6,737
  -7,087
  -7,454
  -7,838
Prev. year cash balance distribution, $m
  1,143
  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
  9,238
  8,098
  8,157
  8,240
  8,343
  8,468
  8,613
  8,778
  8,963
  9,167
  7,737
  7,980
  8,244
  8,528
  8,832
  9,159
  9,507
  9,877
  10,271
  10,689
  11,133
  11,602
  12,099
  12,623
  13,178
  13,763
  14,379
  15,030
  15,715
  16,437
Discount rate, %
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
  8,807
  7,325
  6,966
  6,608
  6,248
  5,885
  5,519
  5,149
  4,778
  4,406
  3,324
  3,038
  2,754
  2,475
  2,202
  1,940
  1,690
  1,454
  1,235
  1,035
  855
  695
  556
  436
  336
  254
  188
  136
  96
  66
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

Medtronic plc manufactures and sells device-based medical therapies worldwide. The company’s Cardiac and Vascular Group segment offers pacemakers, implantable cardioverter defibrillators and cardiac resynchronization therapy devices, AF products, diagnostics and monitoring devices, and remote monitoring and patient-centered software; and heart valves, percutaneous coronary intervention stent products, surgical valve replacement and repair products, endovascular stent grafts, peripheral vascular intervention products, and products to treat superficial and deep venous diseases. Its Minimally Invasive Therapies Group segment provides gastrointestinal diagnostics, ablation, and interventional lung solutions; stapling, vessel sealing, and other surgical instruments; sutures; electrosurgery products; hernia mechanical devices; mesh implants; products for patient monitoring and recovery; sensors; monitors; compression and dialysis, enteral feeding, and wound care products; and operating room supplies, electrodes, needles, syringes, and sharps disposals. The company’s Restorative Therapies Group segment offers products for various areas of the spine; bone graft substitutes; biologic products; trauma, implantable neurostimulation therapies, and drug delivery systems for the treatment of chronic pain, movement disorders, obsessive-compulsive disorder, overactive bladder, urinary retention, fecal incontinence, and gastroparesis; products to treat conditions of the ear, nose, throat, and neurological disorders; systems that incorporate advanced energy surgical instruments; products for haemostatic sealing of soft tissue and bone; and image-guided surgery and intra-operative imaging systems. Its Diabetes Group segment provides insulin pumps and consumables; continuous glucose monitoring systems; and Web-based therapy management software solutions. It serves hospitals, physicians, clinicians, and patients. Medtronic plc was founded in 1949 and is headquartered in Dublin, Ireland.

FINANCIAL RATIOS  of  Medtronic plc (MDT)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

MDT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MDT stock intrinsic value calculation we used $29953 million for the last fiscal year's total revenue generated by Medtronic plc. The default revenue input number comes from 0001 income statement of Medtronic plc. 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 MDT stock valuation model: a) initial revenue growth rate of 2.4% 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 4.9%, whose default value for MDT is calculated based on our internal credit rating of Medtronic plc, 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 Medtronic plc.
    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 MDT stock the variable cost ratio is equal to 82.1%.

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 MDT 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 Medtronic plc.

Corporate tax rate of 27% is the nominal tax rate for Medtronic plc. 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 MDT 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 MDT are equal to 117.8%.

Life of production assets of 25 years is the average useful life of capital assets used in Medtronic plc 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 MDT is equal to 12.4%. 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 - $50720 million for Medtronic plc - 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 1341.188 million for Medtronic plc 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 Medtronic plc at the current share price and the inputted number of shares is $137.8 billion.

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