Intrinsic value of Monsanto - MON

Previous Close

$127.95

  Intrinsic Value

$154.81

stock screener

  Rating & Target

buy

+21%

Previous close

$127.95

 
Intrinsic value

$154.81

 
Up/down potential

+21%

 
Rating

buy

We calculate the intrinsic value of MON 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 2017), $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 56.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
Revenue, $m
  15,870
  17,149
  18,479
  19,861
  21,297
  22,789
  24,340
  25,953
  27,631
  29,376
  31,193
  33,086
  35,058
  37,113
  39,258
  41,495
  43,832
  46,272
  48,821
  51,487
  54,274
  57,190
  60,241
  63,434
  66,778
  70,280
  73,948
  77,792
  81,820
  86,042
Variable operating expenses, $m
  4,147
  4,440
  4,744
  5,061
  5,390
  5,732
  6,087
  6,457
  6,841
  7,241
  7,146
  7,579
  8,031
  8,502
  8,993
  9,506
  10,041
  10,600
  11,184
  11,795
  12,433
  13,101
  13,800
  14,532
  15,298
  16,100
  16,940
  17,821
  18,743
  19,711
Fixed operating expenses, $m
  7,892
  8,066
  8,243
  8,424
  8,610
  8,799
  8,993
  9,190
  9,393
  9,599
  9,810
  10,026
  10,247
  10,472
  10,703
  10,938
  11,179
  11,425
  11,676
  11,933
  12,195
  12,464
  12,738
  13,018
  13,305
  13,597
  13,896
  14,202
  14,515
  14,834
Total operating expenses, $m
  12,039
  12,506
  12,987
  13,485
  14,000
  14,531
  15,080
  15,647
  16,234
  16,840
  16,956
  17,605
  18,278
  18,974
  19,696
  20,444
  21,220
  22,025
  22,860
  23,728
  24,628
  25,565
  26,538
  27,550
  28,603
  29,697
  30,836
  32,023
  33,258
  34,545
Operating income, $m
  3,831
  4,644
  5,491
  6,375
  7,297
  8,258
  9,260
  10,306
  11,397
  12,536
  14,237
  15,480
  16,780
  18,139
  19,562
  21,051
  22,612
  24,247
  25,961
  27,759
  29,645
  31,625
  33,703
  35,884
  38,176
  40,583
  43,111
  45,769
  48,562
  51,497
EBITDA, $m
  5,502
  6,408
  7,353
  8,338
  9,365
  10,435
  11,551
  12,714
  13,928
  15,195
  16,517
  17,899
  19,342
  20,852
  22,432
  24,085
  25,816
  27,629
  29,530
  31,523
  33,613
  35,805
  38,106
  40,521
  43,057
  45,720
  48,517
  51,455
  54,543
  57,787
Interest expense (income), $m
  417
  439
  506
  577
  650
  726
  804
  886
  972
  1,060
  1,153
  1,248
  1,348
  1,452
  1,561
  1,674
  1,791
  1,914
  2,043
  2,177
  2,317
  2,463
  2,616
  2,777
  2,944
  3,120
  3,303
  3,496
  3,697
  3,909
  4,130
Earnings before tax, $m
  3,393
  4,137
  4,915
  5,726
  6,572
  7,454
  8,374
  9,334
  10,337
  11,384
  12,988
  14,132
  15,327
  16,578
  17,888
  19,260
  20,697
  22,204
  23,785
  25,442
  27,182
  29,008
  30,926
  32,940
  35,056
  37,279
  39,616
  42,071
  44,653
  47,367
Tax expense, $m
  916
  1,117
  1,327
  1,546
  1,774
  2,012
  2,261
  2,520
  2,791
  3,074
  3,507
  3,816
  4,138
  4,476
  4,830
  5,200
  5,588
  5,995
  6,422
  6,869
  7,339
  7,832
  8,350
  8,894
  9,465
  10,065
  10,696
  11,359
  12,056
  12,789
Net income, $m
  2,477
  3,020
  3,588
  4,180
  4,797
  5,441
  6,113
  6,814
  7,546
  8,310
  9,482
  10,316
  11,189
  12,102
  13,058
  14,060
  15,109
  16,209
  17,363
  18,573
  19,843
  21,176
  22,576
  24,046
  25,591
  27,214
  28,919
  30,712
  32,597
  34,578

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
  23,134
  24,998
  26,937
  28,951
  31,045
  33,220
  35,481
  37,832
  40,278
  42,822
  45,471
  48,230
  51,104
  54,101
  57,227
  60,489
  63,895
  67,452
  71,168
  75,054
  79,117
  83,367
  87,814
  92,469
  97,344
  102,449
  107,796
  113,399
  119,271
  125,425
Adjusted assets (=assets-cash), $m
  23,134
  24,998
  26,937
  28,951
  31,045
  33,220
  35,481
  37,832
  40,278
  42,822
  45,471
  48,230
  51,104
  54,101
  57,227
  60,489
  63,895
  67,452
  71,168
  75,054
  79,117
  83,367
  87,814
  92,469
  97,344
  102,449
  107,796
  113,399
  119,271
  125,425
Revenue / Adjusted assets
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
  0.686
Average production assets, $m
  11,601
  12,536
  13,508
  14,518
  15,568
  16,659
  17,793
  18,972
  20,198
  21,474
  22,802
  24,186
  25,627
  27,130
  28,697
  30,333
  32,041
  33,825
  35,688
  37,637
  39,674
  41,806
  44,036
  46,370
  48,815
  51,374
  54,056
  56,866
  59,810
  62,896
Working capital, $m
  2,349
  2,538
  2,735
  2,939
  3,152
  3,373
  3,602
  3,841
  4,089
  4,348
  4,617
  4,897
  5,189
  5,493
  5,810
  6,141
  6,487
  6,848
  7,226
  7,620
  8,033
  8,464
  8,916
  9,388
  9,883
  10,401
  10,944
  11,513
  12,109
  12,734
Total debt, $m
  9,376
  10,678
  12,031
  13,437
  14,898
  16,417
  17,995
  19,636
  21,343
  23,119
  24,968
  26,893
  28,900
  30,992
  33,173
  35,450
  37,827
  40,310
  42,904
  45,616
  48,452
  51,419
  54,523
  57,773
  61,175
  64,738
  68,471
  72,381
  76,480
  80,776
Total liabilities, $m
  16,147
  17,449
  18,802
  20,208
  21,669
  23,188
  24,766
  26,407
  28,114
  29,890
  31,739
  33,664
  35,671
  37,763
  39,944
  42,221
  44,598
  47,081
  49,675
  52,387
  55,223
  58,190
  61,294
  64,544
  67,946
  71,509
  75,242
  79,152
  83,251
  87,547
Total equity, $m
  6,986
  7,549
  8,135
  8,743
  9,375
  10,032
  10,715
  11,425
  12,164
  12,932
  13,732
  14,565
  15,433
  16,339
  17,283
  18,268
  19,296
  20,370
  21,493
  22,666
  23,893
  25,177
  26,520
  27,926
  29,398
  30,939
  32,554
  34,246
  36,020
  37,878
Total liabilities and equity, $m
  23,133
  24,998
  26,937
  28,951
  31,044
  33,220
  35,481
  37,832
  40,278
  42,822
  45,471
  48,229
  51,104
  54,102
  57,227
  60,489
  63,894
  67,451
  71,168
  75,053
  79,116
  83,367
  87,814
  92,470
  97,344
  102,448
  107,796
  113,398
  119,271
  125,425
Debt-to-equity ratio
  1.340
  1.410
  1.480
  1.540
  1.590
  1.640
  1.680
  1.720
  1.750
  1.790
  1.820
  1.850
  1.870
  1.900
  1.920
  1.940
  1.960
  1.980
  2.000
  2.010
  2.030
  2.040
  2.060
  2.070
  2.080
  2.090
  2.100
  2.110
  2.120
  2.130
Adjusted equity ratio
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,477
  3,020
  3,588
  4,180
  4,797
  5,441
  6,113
  6,814
  7,546
  8,310
  9,482
  10,316
  11,189
  12,102
  13,058
  14,060
  15,109
  16,209
  17,363
  18,573
  19,843
  21,176
  22,576
  24,046
  25,591
  27,214
  28,919
  30,712
  32,597
  34,578
Depreciation, amort., depletion, $m
  1,671
  1,765
  1,862
  1,963
  2,068
  2,177
  2,290
  2,408
  2,531
  2,659
  2,280
  2,419
  2,563
  2,713
  2,870
  3,033
  3,204
  3,382
  3,569
  3,764
  3,967
  4,181
  4,404
  4,637
  4,881
  5,137
  5,406
  5,687
  5,981
  6,290
Funds from operations, $m
  4,148
  4,785
  5,450
  6,143
  6,865
  7,618
  8,403
  9,222
  10,077
  10,969
  11,762
  12,735
  13,752
  14,815
  15,928
  17,093
  18,313
  19,592
  20,932
  22,337
  23,810
  25,357
  26,979
  28,683
  30,472
  32,351
  34,325
  36,399
  38,578
  40,868
Change in working capital, $m
  182
  189
  197
  205
  213
  221
  230
  239
  248
  258
  269
  280
  292
  304
  317
  331
  346
  361
  377
  394
  413
  432
  452
  473
  495
  518
  543
  569
  596
  625
Cash from operations, $m
  3,966
  4,596
  5,253
  5,938
  6,653
  7,397
  8,174
  8,984
  9,829
  10,710
  11,493
  12,455
  13,460
  14,511
  15,611
  16,762
  17,967
  19,230
  20,554
  21,942
  23,398
  24,925
  26,528
  28,211
  29,977
  31,833
  33,782
  35,830
  37,982
  40,243
Maintenance CAPEX, $m
  -1,071
  -1,160
  -1,254
  -1,351
  -1,452
  -1,557
  -1,666
  -1,779
  -1,897
  -2,020
  -2,147
  -2,280
  -2,419
  -2,563
  -2,713
  -2,870
  -3,033
  -3,204
  -3,382
  -3,569
  -3,764
  -3,967
  -4,181
  -4,404
  -4,637
  -4,881
  -5,137
  -5,406
  -5,687
  -5,981
New CAPEX, $m
  -892
  -935
  -972
  -1,010
  -1,050
  -1,091
  -1,134
  -1,179
  -1,226
  -1,276
  -1,328
  -1,383
  -1,442
  -1,503
  -1,568
  -1,636
  -1,708
  -1,784
  -1,864
  -1,948
  -2,037
  -2,131
  -2,230
  -2,334
  -2,444
  -2,560
  -2,682
  -2,810
  -2,944
  -3,086
Cash from investing activities, $m
  -1,963
  -2,095
  -2,226
  -2,361
  -2,502
  -2,648
  -2,800
  -2,958
  -3,123
  -3,296
  -3,475
  -3,663
  -3,861
  -4,066
  -4,281
  -4,506
  -4,741
  -4,988
  -5,246
  -5,517
  -5,801
  -6,098
  -6,411
  -6,738
  -7,081
  -7,441
  -7,819
  -8,216
  -8,631
  -9,067
Free cash flow, $m
  2,003
  2,501
  3,027
  3,577
  4,151
  4,750
  5,374
  6,025
  6,705
  7,414
  8,017
  8,791
  9,600
  10,445
  11,330
  12,256
  13,226
  14,243
  15,308
  16,425
  17,597
  18,826
  20,117
  21,473
  22,896
  24,392
  25,963
  27,615
  29,351
  31,176
Issuance/(repayment) of debt, $m
  1,252
  1,301
  1,353
  1,406
  1,461
  1,518
  1,578
  1,641
  1,707
  1,776
  1,849
  1,926
  2,006
  2,092
  2,182
  2,277
  2,377
  2,483
  2,594
  2,712
  2,836
  2,967
  3,104
  3,249
  3,402
  3,563
  3,733
  3,911
  4,098
  4,296
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  
  1,252
  1,301
  1,353
  1,406
  1,461
  1,518
  1,578
  1,641
  1,707
  1,776
  1,849
  1,926
  2,006
  2,092
  2,182
  2,277
  2,377
  2,483
  2,594
  2,712
  2,836
  2,967
  3,104
  3,249
  3,402
  3,563
  3,733
  3,911
  4,098
  4,296
Total cash flow (excl. dividends), $m
  3,255
  3,802
  4,380
  4,983
  5,612
  6,268
  6,952
  7,666
  8,412
  9,190
  9,866
  10,717
  11,606
  12,537
  13,512
  14,533
  15,603
  16,725
  17,902
  19,137
  20,433
  21,793
  23,221
  24,722
  26,298
  27,955
  29,696
  31,525
  33,449
  35,471
Retained Cash Flow (-), $m
  -548
  -563
  -585
  -608
  -632
  -657
  -683
  -710
  -738
  -768
  -800
  -833
  -868
  -905
  -944
  -985
  -1,028
  -1,074
  -1,122
  -1,173
  -1,227
  -1,284
  -1,343
  -1,406
  -1,472
  -1,542
  -1,615
  -1,692
  -1,773
  -1,859
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
  132
  143
  154
  166
  179
  192
  205
  219
  234
  249
  264
  281
  298
  316
  334
  353
  373
  394
  416
  439
  463
  488
  515
  542
  571
  601
  633
  666
  700
  736
Cash available for distribution, $m
  2,707
  3,239
  3,795
  4,375
  4,980
  5,611
  6,270
  6,956
  7,673
  8,422
  9,066
  9,883
  10,738
  11,632
  12,568
  13,548
  14,575
  15,651
  16,780
  17,963
  19,206
  20,509
  21,878
  23,316
  24,826
  26,413
  28,081
  29,833
  31,676
  33,613
Discount rate, %
  5.20
  5.46
  5.73
  6.02
  6.32
  6.64
  6.97
  7.32
  7.68
  8.07
  8.47
  8.89
  9.34
  9.81
  10.30
  10.81
  11.35
  11.92
  12.51
  13.14
  13.80
  14.49
  15.21
  15.97
  16.77
  17.61
  18.49
  19.41
  20.38
  21.40
PV of cash for distribution, $m
  2,573
  2,912
  3,210
  3,463
  3,666
  3,816
  3,912
  3,954
  3,942
  3,877
  3,707
  3,555
  3,364
  3,140
  2,890
  2,622
  2,343
  2,062
  1,786
  1,521
  1,273
  1,045
  843
  666
  515
  389
  288
  208
  146
  100
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

Monsanto Company (Monsanto), along with its subsidiaries, is a provider of agricultural products for farmers. The Company provides seeds, biotechnology trait products, herbicides and digital agriculture tools to farmers. The Company operates through two segments: Seeds and Genomics, and Agricultural Productivity. Through its Seeds and Genomics segment, the Company produces seed brands, including DEKALB, Asgrow, Deltapine, Seminis and De Ruiter, and it develops biotechnology traits that assist farmers in controlling insects and weeds and digital agriculture to assist farmers in decision-making. The Seeds and Genomics segment offers products, such as Germplasm and Biotechnology traits. Through its Agricultural Productivity segment, the Company manufactures Roundup brand herbicides and other herbicides and provides lawn-and-garden herbicide products for the residential market.

FINANCIAL RATIOS  of  Monsanto (MON)

Valuation Ratios
P/E Ratio 24.9
Price to Sales 3.8
Price to Book 8.7
Price to Tangible Book
Price to Cash Flow 17.4
Price to Free Cash Flow 29.4
Growth Rates
Sales Growth Rate 8.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 32.2%
Cap. Spend. - 3 Yr. Gr. Rate -1.4%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 112.7%
Total Debt to Equity 126.2%
Interest Coverage 8
Management Effectiveness
Return On Assets 12.6%
Ret/ On Assets - 3 Yr. Avg. 10.6%
Return On Total Capital 16.1%
Ret/ On T. Cap. - 3 Yr. Avg. 13.2%
Return On Equity 41.2%
Return On Equity - 3 Yr. Avg. 31.8%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 54.2%
Gross Margin - 3 Yr. Avg. 53.6%
EBITDA Margin 27.7%
EBITDA Margin - 3 Yr. Avg. 26.3%
Operating Margin 21.9%
Oper. Margin - 3 Yr. Avg. 21%
Pre-Tax Margin 19.7%
Pre-Tax Margin - 3 Yr. Avg. 18.5%
Net Profit Margin 15.4%
Net Profit Margin - 3 Yr. Avg. 13.6%
Effective Tax Rate 21.7%
Eff/ Tax Rate - 3 Yr. Avg. 28%
Payout Ratio 41.9%

MON stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MON stock intrinsic value calculation we used $14640 million for the last fiscal year's total revenue generated by Monsanto. The default revenue input number comes from 2017 income statement of Monsanto. 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 MON stock valuation model: a) initial revenue growth rate of 8.4% 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 5.2%, whose default value for MON is calculated based on our internal credit rating of Monsanto, 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 Monsanto.
    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 MON stock the variable cost ratio is equal to 26.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7722 million in the base year in the intrinsic value calculation for MON 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 Monsanto.

Corporate tax rate of 27% is the nominal tax rate for Monsanto. 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 MON stock is equal to 0.9%.

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 MON are equal to 73.1%.

Life of production assets of 10 years is the average useful life of capital assets used in Monsanto 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 MON is equal to 14.8%. 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 - $6438 million for Monsanto - 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 439 million for Monsanto 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 Monsanto at the current share price and the inputted number of shares is $56.2 billion.

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