Intrinsic value of Medtronic - MDT

Previous Close

$96.46

  Intrinsic Value

$64.25

stock screener

  Rating & Target

sell

-33%

Previous close

$96.46

 
Intrinsic value

$64.25

 
Up/down potential

-33%

 
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 130.4

 

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, %
  2.90
  3.11
  3.30
  3.47
  3.62
  3.76
  3.88
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  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
  4.89
  4.90
Revenue, $m
  30,822
  31,780
  32,829
  33,967
  35,198
  36,521
  37,940
  39,456
  41,072
  42,791
  44,617
  46,554
  48,606
  50,777
  53,072
  55,496
  58,055
  60,754
  63,600
  66,600
  69,760
  73,087
  76,591
  80,278
  84,157
  88,238
  92,530
  97,044
  101,789
  106,778
Variable operating expenses, $m
  25,127
  25,718
  26,364
  27,066
  27,825
  28,640
  29,515
  30,449
  31,446
  32,506
  27,505
  28,699
  29,964
  31,302
  32,717
  34,211
  35,788
  37,452
  39,207
  41,056
  43,004
  45,055
  47,215
  49,488
  51,879
  54,395
  57,041
  59,824
  62,749
  65,824
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
  25,127
  25,718
  26,364
  27,066
  27,825
  28,640
  29,515
  30,449
  31,446
  32,506
  27,505
  28,699
  29,964
  31,302
  32,717
  34,211
  35,788
  37,452
  39,207
  41,056
  43,004
  45,055
  47,215
  49,488
  51,879
  54,395
  57,041
  59,824
  62,749
  65,824
Operating income, $m
  5,695
  6,062
  6,465
  6,901
  7,373
  7,881
  8,425
  9,006
  9,626
  10,286
  17,113
  17,855
  18,642
  19,475
  20,355
  21,285
  22,266
  23,302
  24,393
  25,544
  26,756
  28,032
  29,376
  30,790
  32,278
  33,843
  35,489
  37,220
  39,040
  40,954
EBITDA, $m
  13,274
  13,686
  14,138
  14,628
  15,158
  15,728
  16,339
  16,992
  17,688
  18,428
  19,215
  20,049
  20,933
  21,868
  22,856
  23,900
  25,002
  26,164
  27,390
  28,682
  30,043
  31,476
  32,985
  34,572
  36,243
  38,001
  39,849
  41,793
  43,837
  45,985
Interest expense (income), $m
  0
  1,391
  1,450
  1,516
  1,589
  1,669
  1,754
  1,846
  1,945
  2,050
  2,163
  2,282
  2,409
  2,544
  2,687
  2,838
  2,998
  3,166
  3,344
  3,532
  3,730
  3,939
  4,158
  4,390
  4,634
  4,890
  5,160
  5,444
  5,743
  6,056
  6,387
Earnings before tax, $m
  4,304
  4,613
  4,948
  5,312
  5,705
  6,127
  6,579
  7,061
  7,576
  8,123
  14,830
  15,446
  16,098
  16,788
  17,517
  18,287
  19,100
  19,957
  20,861
  21,814
  22,817
  23,873
  24,986
  26,156
  27,387
  28,683
  30,045
  31,478
  32,984
  34,567
Tax expense, $m
  1,162
  1,245
  1,336
  1,434
  1,540
  1,654
  1,776
  1,907
  2,045
  2,193
  4,004
  4,170
  4,346
  4,533
  4,730
  4,938
  5,157
  5,388
  5,633
  5,890
  6,161
  6,446
  6,746
  7,062
  7,395
  7,744
  8,112
  8,499
  8,906
  9,333
Net income, $m
  3,142
  3,367
  3,612
  3,878
  4,164
  4,472
  4,802
  5,155
  5,530
  5,930
  10,826
  11,276
  11,752
  12,255
  12,788
  13,350
  13,943
  14,569
  15,229
  15,924
  16,656
  17,428
  18,240
  19,094
  19,993
  20,938
  21,933
  22,979
  24,078
  25,234

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
  90,652
  93,471
  96,555
  99,904
  103,523
  107,416
  111,587
  116,046
  120,799
  125,856
  131,228
  136,924
  142,958
  149,343
  156,093
  163,223
  170,749
  178,688
  187,059
  195,882
  205,176
  214,963
  225,267
  236,111
  247,521
  259,524
  272,148
  285,423
  299,380
  314,053
Adjusted assets (=assets-cash), $m
  90,652
  93,471
  96,555
  99,904
  103,523
  107,416
  111,587
  116,046
  120,799
  125,856
  131,228
  136,924
  142,958
  149,343
  156,093
  163,223
  170,749
  178,688
  187,059
  195,882
  205,176
  214,963
  225,267
  236,111
  247,521
  259,524
  272,148
  285,423
  299,380
  314,053
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
  36,308
  37,437
  38,672
  40,014
  41,463
  43,022
  44,693
  46,479
  48,383
  50,408
  52,559
  54,841
  57,258
  59,815
  62,518
  65,374
  68,388
  71,568
  74,921
  78,455
  82,177
  86,097
  90,224
  94,567
  99,137
  103,944
  109,001
  114,317
  119,908
  125,784
Working capital, $m
  3,822
  3,941
  4,071
  4,212
  4,365
  4,529
  4,705
  4,893
  5,093
  5,306
  5,533
  5,773
  6,027
  6,296
  6,581
  6,881
  7,199
  7,533
  7,886
  8,258
  8,650
  9,063
  9,497
  9,954
  10,435
  10,942
  11,474
  12,033
  12,622
  13,240
Total debt, $m
  26,848
  28,082
  29,433
  30,900
  32,485
  34,190
  36,017
  37,970
  40,052
  42,267
  44,620
  47,115
  49,758
  52,554
  55,511
  58,634
  61,930
  65,407
  69,074
  72,938
  77,009
  81,296
  85,809
  90,558
  95,556
  100,813
  106,343
  112,157
  118,270
  124,697
Total liabilities, $m
  39,706
  40,940
  42,291
  43,758
  45,343
  47,048
  48,875
  50,828
  52,910
  55,125
  57,478
  59,973
  62,616
  65,412
  68,369
  71,492
  74,788
  78,265
  81,932
  85,796
  89,867
  94,154
  98,667
  103,416
  108,414
  113,671
  119,201
  125,015
  131,128
  137,555
Total equity, $m
  50,946
  52,531
  54,264
  56,146
  58,180
  60,368
  62,712
  65,218
  67,889
  70,731
  73,750
  76,951
  80,343
  83,931
  87,724
  91,731
  95,961
  100,423
  105,127
  110,085
  115,309
  120,809
  126,600
  132,694
  139,107
  145,852
  152,947
  160,408
  168,252
  176,498
Total liabilities and equity, $m
  90,652
  93,471
  96,555
  99,904
  103,523
  107,416
  111,587
  116,046
  120,799
  125,856
  131,228
  136,924
  142,959
  149,343
  156,093
  163,223
  170,749
  178,688
  187,059
  195,881
  205,176
  214,963
  225,267
  236,110
  247,521
  259,523
  272,148
  285,423
  299,380
  314,053
Debt-to-equity ratio
  0.530
  0.530
  0.540
  0.550
  0.560
  0.570
  0.570
  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
  0.710
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
  3,142
  3,367
  3,612
  3,878
  4,164
  4,472
  4,802
  5,155
  5,530
  5,930
  10,826
  11,276
  11,752
  12,255
  12,788
  13,350
  13,943
  14,569
  15,229
  15,924
  16,656
  17,428
  18,240
  19,094
  19,993
  20,938
  21,933
  22,979
  24,078
  25,234
Depreciation, amort., depletion, $m
  7,579
  7,624
  7,673
  7,727
  7,785
  7,847
  7,914
  7,986
  8,062
  8,143
  2,102
  2,194
  2,290
  2,393
  2,501
  2,615
  2,736
  2,863
  2,997
  3,138
  3,287
  3,444
  3,609
  3,783
  3,965
  4,158
  4,360
  4,573
  4,796
  5,031
Funds from operations, $m
  10,721
  10,991
  11,286
  11,605
  11,949
  12,320
  12,717
  13,141
  13,592
  14,073
  12,928
  13,469
  14,042
  14,648
  15,288
  15,965
  16,679
  17,432
  18,226
  19,062
  19,943
  20,872
  21,848
  22,877
  23,958
  25,096
  26,293
  27,551
  28,874
  30,265
Change in working capital, $m
  108
  119
  130
  141
  153
  164
  176
  188
  200
  213
  226
  240
  254
  269
  285
  301
  317
  335
  353
  372
  392
  413
  434
  457
  481
  506
  532
  560
  588
  619
Cash from operations, $m
  10,613
  10,872
  11,156
  11,464
  11,797
  12,156
  12,541
  12,953
  13,392
  13,859
  12,702
  13,229
  13,788
  14,379
  15,004
  15,664
  16,361
  17,097
  17,873
  18,690
  19,552
  20,459
  21,414
  22,419
  23,477
  24,590
  25,761
  26,992
  28,286
  29,647
Maintenance CAPEX, $m
  -1,411
  -1,452
  -1,497
  -1,547
  -1,601
  -1,659
  -1,721
  -1,788
  -1,859
  -1,935
  -2,016
  -2,102
  -2,194
  -2,290
  -2,393
  -2,501
  -2,615
  -2,736
  -2,863
  -2,997
  -3,138
  -3,287
  -3,444
  -3,609
  -3,783
  -3,965
  -4,158
  -4,360
  -4,573
  -4,796
New CAPEX, $m
  -1,028
  -1,129
  -1,235
  -1,342
  -1,449
  -1,559
  -1,671
  -1,786
  -1,904
  -2,025
  -2,151
  -2,282
  -2,417
  -2,557
  -2,703
  -2,856
  -3,014
  -3,180
  -3,353
  -3,534
  -3,722
  -3,920
  -4,127
  -4,343
  -4,570
  -4,807
  -5,056
  -5,317
  -5,590
  -5,877
Cash from investing activities, $m
  -2,439
  -2,581
  -2,732
  -2,889
  -3,050
  -3,218
  -3,392
  -3,574
  -3,763
  -3,960
  -4,167
  -4,384
  -4,611
  -4,847
  -5,096
  -5,357
  -5,629
  -5,916
  -6,216
  -6,531
  -6,860
  -7,207
  -7,571
  -7,952
  -8,353
  -8,772
  -9,214
  -9,677
  -10,163
  -10,673
Free cash flow, $m
  8,173
  8,291
  8,423
  8,575
  8,747
  8,938
  9,149
  9,379
  9,629
  9,899
  8,534
  8,845
  9,177
  9,531
  9,908
  10,308
  10,732
  11,181
  11,657
  12,160
  12,691
  13,252
  13,843
  14,467
  15,125
  15,817
  16,547
  17,315
  18,123
  18,974
Issuance/(repayment) of debt, $m
  1,091
  1,235
  1,351
  1,467
  1,585
  1,705
  1,827
  1,953
  2,082
  2,215
  2,353
  2,495
  2,643
  2,797
  2,956
  3,123
  3,296
  3,477
  3,667
  3,864
  4,071
  4,287
  4,513
  4,750
  4,998
  5,257
  5,529
  5,814
  6,113
  6,427
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  
  1,091
  1,235
  1,351
  1,467
  1,585
  1,705
  1,827
  1,953
  2,082
  2,215
  2,353
  2,495
  2,643
  2,797
  2,956
  3,123
  3,296
  3,477
  3,667
  3,864
  4,071
  4,287
  4,513
  4,750
  4,998
  5,257
  5,529
  5,814
  6,113
  6,427
Total cash flow (excl. dividends), $m
  9,264
  9,526
  9,774
  10,042
  10,332
  10,643
  10,976
  11,332
  11,711
  12,114
  10,887
  11,340
  11,820
  12,328
  12,864
  13,431
  14,028
  14,659
  15,324
  16,024
  16,762
  17,539
  18,356
  19,217
  20,122
  21,075
  22,076
  23,129
  24,236
  25,400
Retained Cash Flow (-), $m
  -1,369
  -1,584
  -1,733
  -1,882
  -2,034
  -2,188
  -2,345
  -2,506
  -2,671
  -2,842
  -3,019
  -3,201
  -3,391
  -3,588
  -3,793
  -4,007
  -4,230
  -4,462
  -4,705
  -4,958
  -5,223
  -5,500
  -5,791
  -6,094
  -6,412
  -6,746
  -7,095
  -7,461
  -7,844
  -8,246
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
  9,038
  7,941
  8,041
  8,160
  8,298
  8,456
  8,632
  8,826
  9,039
  9,271
  7,868
  8,139
  8,429
  8,739
  9,071
  9,424
  9,799
  10,197
  10,619
  11,066
  11,539
  12,038
  12,566
  13,123
  13,710
  14,329
  14,981
  15,669
  16,392
  17,154
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
  8,615
  7,183
  6,867
  6,544
  6,214
  5,876
  5,530
  5,178
  4,819
  4,456
  3,381
  3,098
  2,816
  2,536
  2,262
  1,996
  1,742
  1,501
  1,277
  1,072
  886
  721
  577
  454
  350
  265
  196
  142
  100
  69
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 (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. The default revenue input number comes from 0001 income statement of Medtronic. 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 2.9% 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, 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.
    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.

Corporate tax rate of 27% is the nominal tax rate for Medtronic. 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 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 - 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 1351.71 million for Medtronic 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 at the current share price and the inputted number of shares is $130.4 billion.

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