Intrinsic value of Microsoft Corporation - MSFT

Previous Close

$136.97

  Intrinsic Value

$131.35

stock screener

  Rating & Target

hold

-4%

Previous close

$136.97

 
Intrinsic value

$131.35

 
Up/down potential

-4%

 
Rating

hold

We calculate the intrinsic value of MSFT 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 1,050.9

 

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, %
  12.30
  11.57
  10.91
  10.32
  9.79
  9.31
  8.88
  8.49
  8.14
  7.83
  7.55
  7.29
  7.06
  6.86
  6.67
  6.50
  6.35
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
Revenue, $m
  123,934
  138,273
  153,363
  169,193
  185,756
  203,051
  221,081
  239,854
  259,384
  279,689
  300,793
  322,723
  345,513
  369,200
  393,825
  419,436
  446,081
  473,816
  502,699
  532,791
  564,159
  596,873
  631,008
  666,641
  703,854
  742,736
  783,376
  825,870
  870,319
  916,827
Variable operating expenses, $m
  69,113
  76,603
  84,486
  92,755
  101,407
  110,441
  119,860
  129,666
  139,868
  150,475
  157,125
  168,581
  180,485
  192,859
  205,722
  219,101
  233,019
  247,507
  262,595
  278,314
  294,700
  311,788
  329,619
  348,233
  367,672
  387,983
  409,212
  431,409
  454,628
  478,923
Fixed operating expenses, $m
  13,815
  14,119
  14,430
  14,747
  15,072
  15,403
  15,742
  16,089
  16,443
  16,804
  17,174
  17,552
  17,938
  18,333
  18,736
  19,148
  19,569
  20,000
  20,440
  20,890
  21,349
  21,819
  22,299
  22,789
  23,291
  23,803
  24,327
  24,862
  25,409
  25,968
Total operating expenses, $m
  82,928
  90,722
  98,916
  107,502
  116,479
  125,844
  135,602
  145,755
  156,311
  167,279
  174,299
  186,133
  198,423
  211,192
  224,458
  238,249
  252,588
  267,507
  283,035
  299,204
  316,049
  333,607
  351,918
  371,022
  390,963
  411,786
  433,539
  456,271
  480,037
  504,891
Operating income, $m
  41,006
  47,551
  54,447
  61,691
  69,277
  77,206
  85,479
  94,099
  103,074
  112,410
  126,494
  136,590
  147,089
  158,008
  169,367
  181,187
  193,493
  206,309
  219,664
  233,587
  248,110
  263,266
  279,089
  295,618
  312,891
  330,950
  349,837
  369,598
  390,282
  411,936
EBITDA, $m
  53,582
  61,076
  68,971
  77,262
  85,945
  95,019
  104,485
  114,348
  124,614
  135,295
  146,401
  157,950
  169,957
  182,444
  195,432
  208,947
  223,016
  237,668
  252,935
  268,850
  285,449
  302,769
  320,852
  339,739
  359,475
  380,107
  401,684
  424,258
  447,883
  472,616
Interest expense (income), $m
  1,600
  4,418
  4,916
  6,049
  7,242
  8,493
  9,802
  11,168
  12,593
  14,077
  15,620
  17,225
  18,892
  20,626
  22,426
  24,298
  26,244
  28,268
  30,374
  32,566
  34,848
  37,226
  39,705
  42,290
  44,987
  47,803
  50,744
  53,817
  57,028
  60,386
  63,899
Earnings before tax, $m
  36,588
  42,634
  48,398
  54,449
  60,784
  67,405
  74,311
  81,506
  88,997
  96,790
  109,269
  117,698
  126,464
  135,582
  145,069
  154,943
  165,224
  175,935
  187,099
  198,739
  210,884
  223,561
  236,799
  250,631
  265,088
  280,206
  296,020
  312,570
  329,895
  348,037
Tax expense, $m
  9,879
  11,511
  13,067
  14,701
  16,412
  18,199
  20,064
  22,007
  24,029
  26,133
  29,503
  31,778
  34,145
  36,607
  39,169
  41,835
  44,611
  47,503
  50,517
  53,660
  56,939
  60,361
  63,936
  67,670
  71,574
  75,656
  79,926
  84,394
  89,072
  93,970
Net income, $m
  26,709
  31,123
  35,330
  39,748
  44,373
  49,205
  54,247
  59,499
  64,968
  70,657
  79,766
  85,920
  92,319
  98,975
  105,900
  113,108
  120,614
  128,433
  136,582
  145,080
  153,945
  163,200
  172,864
  182,960
  193,514
  204,550
  216,095
  228,176
  240,823
  254,067

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
  201,519
  224,835
  249,371
  275,110
  302,043
  330,164
  359,481
  390,007
  421,763
  454,779
  489,094
  524,753
  561,810
  600,325
  640,367
  682,010
  725,336
  770,433
  817,396
  866,327
  917,332
  970,525
  1,026,029
  1,083,968
  1,144,479
  1,207,701
  1,273,782
  1,342,878
  1,415,152
  1,490,776
Adjusted assets (=assets-cash), $m
  201,519
  224,835
  249,371
  275,110
  302,043
  330,164
  359,481
  390,007
  421,763
  454,779
  489,094
  524,753
  561,810
  600,325
  640,367
  682,010
  725,336
  770,433
  817,396
  866,327
  917,332
  970,525
  1,026,029
  1,083,968
  1,144,479
  1,207,701
  1,273,782
  1,342,878
  1,415,152
  1,490,776
Revenue / Adjusted assets
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
  0.615
Average production assets, $m
  62,339
  69,552
  77,142
  85,104
  93,435
  102,135
  111,204
  120,647
  130,470
  140,684
  151,299
  162,330
  173,793
  185,708
  198,094
  210,976
  224,379
  238,330
  252,857
  267,994
  283,772
  300,227
  317,397
  335,320
  354,039
  373,596
  394,038
  415,413
  437,770
  461,164
Working capital, $m
  -20,945
  -23,368
  -25,918
  -28,594
  -31,393
  -34,316
  -37,363
  -40,535
  -43,836
  -47,267
  -50,834
  -54,540
  -58,392
  -62,395
  -66,557
  -70,885
  -75,388
  -80,075
  -84,956
  -90,042
  -95,343
  -100,872
  -106,640
  -112,662
  -118,951
  -125,522
  -132,391
  -139,572
  -147,084
  -154,944
Total debt, $m
  91,043
  112,027
  134,110
  157,275
  181,514
  206,824
  233,209
  260,682
  289,263
  318,977
  349,861
  381,954
  415,305
  449,968
  486,006
  523,485
  562,478
  603,066
  645,333
  689,370
  735,274
  783,149
  833,102
  885,248
  939,707
  996,606
  1,056,080
  1,118,266
  1,183,313
  1,251,374
Total liabilities, $m
  181,367
  202,351
  224,434
  247,599
  271,838
  297,148
  323,533
  351,006
  379,587
  409,301
  440,185
  472,278
  505,629
  540,292
  576,330
  613,809
  652,802
  693,390
  735,657
  779,694
  825,598
  873,473
  923,426
  975,572
  1,030,031
  1,086,930
  1,146,404
  1,208,590
  1,273,637
  1,341,698
Total equity, $m
  20,152
  22,483
  24,937
  27,511
  30,204
  33,016
  35,948
  39,001
  42,176
  45,478
  48,909
  52,475
  56,181
  60,032
  64,037
  68,201
  72,534
  77,043
  81,740
  86,633
  91,733
  97,053
  102,603
  108,397
  114,448
  120,770
  127,378
  134,288
  141,515
  149,078
Total liabilities and equity, $m
  201,519
  224,834
  249,371
  275,110
  302,042
  330,164
  359,481
  390,007
  421,763
  454,779
  489,094
  524,753
  561,810
  600,324
  640,367
  682,010
  725,336
  770,433
  817,397
  866,327
  917,331
  970,526
  1,026,029
  1,083,969
  1,144,479
  1,207,700
  1,273,782
  1,342,878
  1,415,152
  1,490,776
Debt-to-equity ratio
  4.520
  4.980
  5.380
  5.720
  6.010
  6.260
  6.490
  6.680
  6.860
  7.010
  7.150
  7.280
  7.390
  7.500
  7.590
  7.680
  7.750
  7.830
  7.890
  7.960
  8.020
  8.070
  8.120
  8.170
  8.210
  8.250
  8.290
  8.330
  8.360
  8.390
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  26,709
  31,123
  35,330
  39,748
  44,373
  49,205
  54,247
  59,499
  64,968
  70,657
  79,766
  85,920
  92,319
  98,975
  105,900
  113,108
  120,614
  128,433
  136,582
  145,080
  153,945
  163,200
  172,864
  182,960
  193,514
  204,550
  216,095
  228,176
  240,823
  254,067
Depreciation, amort., depletion, $m
  12,576
  13,525
  14,524
  15,572
  16,668
  17,812
  19,006
  20,248
  21,541
  22,885
  19,908
  21,359
  22,868
  24,435
  26,065
  27,760
  29,524
  31,359
  33,271
  35,262
  37,338
  39,504
  41,763
  44,121
  46,584
  49,157
  51,847
  54,660
  57,601
  60,679
Funds from operations, $m
  39,285
  44,648
  49,854
  55,319
  61,040
  67,018
  73,252
  79,748
  86,508
  93,541
  99,674
  107,279
  115,186
  123,410
  131,965
  140,868
  150,137
  159,792
  169,853
  180,342
  191,284
  202,703
  214,626
  227,082
  240,098
  253,708
  267,942
  282,836
  298,425
  314,747
Change in working capital, $m
  -2,294
  -2,423
  -2,550
  -2,675
  -2,799
  -2,923
  -3,047
  -3,173
  -3,301
  -3,432
  -3,566
  -3,706
  -3,851
  -4,003
  -4,162
  -4,328
  -4,503
  -4,687
  -4,881
  -5,086
  -5,301
  -5,529
  -5,769
  -6,022
  -6,289
  -6,571
  -6,868
  -7,182
  -7,512
  -7,860
Cash from operations, $m
  41,579
  47,072
  52,404
  57,994
  63,840
  69,941
  76,299
  82,920
  89,809
  96,973
  103,241
  110,985
  119,038
  127,413
  136,127
  145,196
  154,640
  164,479
  174,734
  185,428
  196,585
  208,232
  220,395
  233,104
  246,387
  260,279
  274,810
  290,017
  305,937
  322,607
Maintenance CAPEX, $m
  -7,297
  -8,202
  -9,152
  -10,150
  -11,198
  -12,294
  -13,439
  -14,632
  -15,875
  -17,167
  -18,511
  -19,908
  -21,359
  -22,868
  -24,435
  -26,065
  -27,760
  -29,524
  -31,359
  -33,271
  -35,262
  -37,338
  -39,504
  -41,763
  -44,121
  -46,584
  -49,157
  -51,847
  -54,660
  -57,601
New CAPEX, $m
  -6,880
  -7,213
  -7,590
  -7,962
  -8,331
  -8,699
  -9,069
  -9,443
  -9,824
  -10,213
  -10,615
  -11,031
  -11,463
  -11,914
  -12,387
  -12,882
  -13,403
  -13,951
  -14,528
  -15,136
  -15,778
  -16,455
  -17,170
  -17,923
  -18,719
  -19,557
  -20,442
  -21,375
  -22,358
  -23,394
Cash from investing activities, $m
  -14,177
  -15,415
  -16,742
  -18,112
  -19,529
  -20,993
  -22,508
  -24,075
  -25,699
  -27,380
  -29,126
  -30,939
  -32,822
  -34,782
  -36,822
  -38,947
  -41,163
  -43,475
  -45,887
  -48,407
  -51,040
  -53,793
  -56,674
  -59,686
  -62,840
  -66,141
  -69,599
  -73,222
  -77,018
  -80,995
Free cash flow, $m
  27,402
  31,656
  35,663
  39,882
  44,310
  48,947
  53,792
  58,845
  64,111
  69,592
  74,114
  80,046
  86,215
  92,631
  99,305
  106,249
  113,478
  121,005
  128,847
  137,021
  145,545
  154,438
  163,722
  173,417
  183,548
  194,137
  205,211
  216,796
  228,919
  241,612
Issuance/(repayment) of debt, $m
  9,235
  20,984
  22,083
  23,165
  24,239
  25,310
  26,385
  27,473
  28,580
  29,715
  30,883
  32,093
  33,351
  34,664
  36,038
  37,479
  38,993
  40,588
  42,267
  44,037
  45,905
  47,874
  49,953
  52,146
  54,459
  56,900
  59,473
  62,187
  65,047
  68,061
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  
  9,235
  20,984
  22,083
  23,165
  24,239
  25,310
  26,385
  27,473
  28,580
  29,715
  30,883
  32,093
  33,351
  34,664
  36,038
  37,479
  38,993
  40,588
  42,267
  44,037
  45,905
  47,874
  49,953
  52,146
  54,459
  56,900
  59,473
  62,187
  65,047
  68,061
Total cash flow (excl. dividends), $m
  36,637
  52,641
  57,745
  63,047
  68,549
  74,257
  80,177
  86,318
  92,691
  99,307
  104,998
  112,139
  119,566
  127,295
  135,343
  143,728
  152,471
  161,592
  171,114
  181,058
  191,449
  202,313
  213,675
  225,563
  238,007
  251,037
  264,684
  278,982
  293,966
  309,673
Retained Cash Flow (-), $m
  -12,714
  -2,332
  -2,454
  -2,574
  -2,693
  -2,812
  -2,932
  -3,053
  -3,176
  -3,302
  -3,431
  -3,566
  -3,706
  -3,852
  -4,004
  -4,164
  -4,333
  -4,510
  -4,696
  -4,893
  -5,101
  -5,319
  -5,550
  -5,794
  -6,051
  -6,322
  -6,608
  -6,910
  -7,227
  -7,562
Prev. year cash balance distribution, $m
  75,280
  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
  99,203
  50,309
  55,292
  60,473
  65,856
  71,445
  77,245
  83,266
  89,516
  96,005
  101,566
  108,573
  115,861
  123,443
  131,338
  139,564
  148,139
  157,083
  166,417
  176,165
  186,349
  196,993
  208,124
  219,769
  231,956
  244,715
  258,076
  272,073
  286,739
  302,110
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
  95,113
  46,056
  48,119
  49,794
  51,046
  51,850
  52,186
  52,043
  51,422
  50,332
  48,232
  46,332
  44,052
  41,442
  38,559
  35,466
  32,233
  28,928
  25,624
  22,385
  19,275
  16,345
  13,641
  11,193
  9,023
  7,140
  5,539
  4,209
  3,130
  2,275
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

Microsoft Corporation is a technology company. The Company develops, licenses, and supports a range of software products, services and devices. The Company's segments include Productivity and Business Processes, Intelligent Cloud and More Personal Computing. The Company's products include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; video games, and training and certification of computer system integrators and developers. It also designs, manufactures, and sells devices, including personal computers (PCs), tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories, that integrate with its cloud-based offerings. It offers an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and it provides solution support and consulting services.

FINANCIAL RATIOS  of  Microsoft Corporation (MSFT)

Valuation Ratios
P/E Ratio 49.8
Price to Sales 11.7
Price to Book 12
Price to Tangible Book
Price to Cash Flow 26.7
Price to Free Cash Flow 33.6
Growth Rates
Sales Growth Rate 5.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -2.6%
Cap. Spend. - 3 Yr. Gr. Rate 8.2%
Financial Strength
Quick Ratio 13
Current Ratio 0.1
LT Debt to Equity 86.7%
Total Debt to Equity 98.3%
Interest Coverage 15
Management Effectiveness
Return On Assets 10.2%
Ret/ On Assets - 3 Yr. Avg. 9%
Return On Total Capital 14.2%
Ret/ On T. Cap. - 3 Yr. Avg. 12.9%
Return On Equity 26.6%
Return On Equity - 3 Yr. Avg. 21%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 61.9%
Gross Margin - 3 Yr. Avg. 62.7%
EBITDA Margin 37.3%
EBITDA Margin - 3 Yr. Avg. 32.1%
Operating Margin 24.8%
Oper. Margin - 3 Yr. Avg. 22.4%
Pre-Tax Margin 25.7%
Pre-Tax Margin - 3 Yr. Avg. 22.9%
Net Profit Margin 23.6%
Net Profit Margin - 3 Yr. Avg. 18.8%
Effective Tax Rate 8.4%
Eff/ Tax Rate - 3 Yr. Avg. 19.2%
Payout Ratio 55.9%

MSFT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MSFT stock intrinsic value calculation we used $110360 million for the last fiscal year's total revenue generated by Microsoft Corporation. The default revenue input number comes from 0001 income statement of Microsoft Corporation. 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 MSFT stock valuation model: a) initial revenue growth rate of 12.3% 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 MSFT is calculated based on our internal credit rating of Microsoft Corporation, 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 Microsoft Corporation.
    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 MSFT stock the variable cost ratio is equal to 56.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $13518 million in the base year in the intrinsic value calculation for MSFT 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 Microsoft Corporation.

Corporate tax rate of 27% is the nominal tax rate for Microsoft Corporation. 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 MSFT 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 MSFT are equal to 50.3%.

Life of production assets of 7.6 years is the average useful life of capital assets used in Microsoft Corporation 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 MSFT is equal to -16.9%. 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 - $82718 million for Microsoft Corporation - 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 7672.246 million for Microsoft Corporation 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 Microsoft Corporation at the current share price and the inputted number of shares is $1,050.9 billion.

RELATED COMPANIES Price Int.Val. Rating
ADBE Adobe Inc. 299.33 267.94  hold
HPQ HP Inc. 20.70 17.13  hold
AAPL Apple Inc. 198.78 166.34  hold
IBM International 139.20 162.95  hold
HPE Hewlett Packar 14.94 37.37  str.buy

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.