Intrinsic value of Oracle - ORCL

Previous Close

$50.71

  Intrinsic Value

$36.10

stock screener

  Rating & Target

sell

-29%

Previous close

$50.71

 
Intrinsic value

$36.10

 
Up/down potential

-29%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of ORCL 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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, %
  1.84
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
Revenue, $m
  37,728
  40,180
  42,732
  45,388
  48,153
  51,035
  54,039
  57,171
  60,440
  63,852
  67,416
  71,139
  75,031
  79,101
  83,357
  87,811
  92,473
  97,354
  102,465
  107,819
  113,428
  119,306
  125,468
  131,926
  138,698
  145,799
  153,246
  161,057
  169,250
  177,845
  186,863
Variable operating expenses, $m
 
  26,239
  27,632
  29,082
  30,592
  32,165
  33,805
  35,515
  37,299
  39,162
  41,107
  38,835
  40,960
  43,182
  45,505
  47,937
  50,482
  53,146
  55,936
  58,859
  61,921
  65,130
  68,494
  72,019
  75,716
  79,593
  83,658
  87,922
  92,395
  97,087
  102,010
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
  25,018
  26,239
  27,632
  29,082
  30,592
  32,165
  33,805
  35,515
  37,299
  39,162
  41,107
  38,835
  40,960
  43,182
  45,505
  47,937
  50,482
  53,146
  55,936
  58,859
  61,921
  65,130
  68,494
  72,019
  75,716
  79,593
  83,658
  87,922
  92,395
  97,087
  102,010
Operating income, $m
  12,710
  13,941
  15,100
  16,306
  17,562
  18,870
  20,234
  21,657
  23,141
  24,690
  26,309
  32,304
  34,071
  35,919
  37,852
  39,874
  41,991
  44,208
  46,529
  48,960
  51,507
  54,176
  56,974
  59,907
  62,982
  66,206
  69,588
  73,135
  76,855
  80,758
  84,853
EBITDA, $m
  15,161
  18,822
  20,017
  21,261
  22,556
  23,906
  25,313
  26,781
  28,312
  29,910
  31,580
  33,324
  35,147
  37,053
  39,047
  41,133
  43,317
  45,603
  47,997
  50,505
  53,133
  55,886
  58,772
  61,798
  64,970
  68,296
  71,785
  75,443
  79,281
  83,308
  87,532
Interest expense (income), $m
  1,612
  1,650
  1,467
  1,614
  1,767
  1,926
  2,092
  2,265
  2,445
  2,633
  2,830
  3,035
  3,250
  3,474
  3,708
  3,953
  4,210
  4,478
  4,759
  5,054
  5,362
  5,685
  6,023
  6,378
  6,750
  7,140
  7,549
  7,978
  8,428
  8,899
  9,394
Earnings before tax, $m
  11,517
  12,291
  13,633
  14,692
  15,795
  16,944
  18,142
  19,392
  20,696
  22,057
  23,479
  29,269
  30,822
  32,445
  34,144
  35,921
  37,782
  39,729
  41,769
  43,906
  46,145
  48,491
  50,951
  53,529
  56,232
  59,066
  62,039
  65,157
  68,427
  71,859
  75,459
Tax expense, $m
  2,182
  3,319
  3,681
  3,967
  4,265
  4,575
  4,898
  5,236
  5,588
  5,955
  6,339
  7,903
  8,322
  8,760
  9,219
  9,699
  10,201
  10,727
  11,278
  11,855
  12,459
  13,093
  13,757
  14,453
  15,183
  15,948
  16,750
  17,592
  18,475
  19,402
  20,374
Net income, $m
  9,335
  8,973
  9,952
  10,725
  11,530
  12,369
  13,244
  14,156
  15,108
  16,102
  17,139
  21,366
  22,500
  23,685
  24,925
  26,222
  27,581
  29,002
  30,492
  32,052
  33,686
  35,399
  37,194
  39,076
  41,049
  43,118
  45,288
  47,564
  49,952
  52,457
  55,085

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  66,078
  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
  134,991
  73,456
  78,120
  82,975
  88,032
  93,299
  98,791
  104,518
  110,494
  116,732
  123,247
  130,054
  137,169
  144,608
  152,390
  160,532
  169,055
  177,977
  187,321
  197,109
  207,364
  218,110
  229,374
  241,181
  253,561
  266,543
  280,157
  294,436
  309,415
  325,128
  341,614
Adjusted assets (=assets-cash), $m
  68,913
  73,456
  78,120
  82,975
  88,032
  93,299
  98,791
  104,518
  110,494
  116,732
  123,247
  130,054
  137,169
  144,608
  152,390
  160,532
  169,055
  177,977
  187,321
  197,109
  207,364
  218,110
  229,374
  241,181
  253,561
  266,543
  280,157
  294,436
  309,415
  325,128
  341,614
Revenue / Adjusted assets
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
  0.547
Average production assets, $m
  10,969
  11,692
  12,435
  13,208
  14,013
  14,851
  15,725
  16,637
  17,588
  18,581
  19,618
  20,702
  21,834
  23,018
  24,257
  25,553
  26,910
  28,330
  29,817
  31,375
  33,008
  34,718
  36,511
  38,391
  40,361
  42,427
  44,595
  46,867
  49,252
  51,753
  54,377
Working capital, $m
  50,337
  -6,348
  -6,752
  -7,171
  -7,608
  -8,063
  -8,538
  -9,033
  -9,550
  -10,089
  -10,652
  -11,240
  -11,855
  -12,498
  -13,170
  -13,874
  -14,611
  -15,382
  -16,189
  -17,035
  -17,922
  -18,850
  -19,824
  -20,844
  -21,914
  -23,036
  -24,213
  -25,447
  -26,741
  -28,100
  -29,524
Total debt, $m
  56,929
  41,908
  46,106
  50,476
  55,026
  59,768
  64,710
  69,864
  75,242
  80,857
  86,720
  92,846
  99,250
  105,945
  112,949
  120,277
  127,947
  135,978
  144,387
  153,196
  162,426
  172,097
  182,234
  192,861
  204,003
  215,686
  227,939
  240,790
  254,271
  268,413
  283,251
Total liabilities, $m
  81,131
  66,110
  70,308
  74,678
  79,228
  83,970
  88,912
  94,066
  99,444
  105,059
  110,922
  117,048
  123,452
  130,147
  137,151
  144,479
  152,149
  160,180
  168,589
  177,398
  186,628
  196,299
  206,436
  217,063
  228,205
  239,888
  252,141
  264,992
  278,473
  292,615
  307,453
Total equity, $m
  53,860
  7,346
  7,812
  8,298
  8,803
  9,330
  9,879
  10,452
  11,049
  11,673
  12,325
  13,005
  13,717
  14,461
  15,239
  16,053
  16,905
  17,798
  18,732
  19,711
  20,736
  21,811
  22,937
  24,118
  25,356
  26,654
  28,016
  29,444
  30,941
  32,513
  34,161
Total liabilities and equity, $m
  134,991
  73,456
  78,120
  82,976
  88,031
  93,300
  98,791
  104,518
  110,493
  116,732
  123,247
  130,053
  137,169
  144,608
  152,390
  160,532
  169,054
  177,978
  187,321
  197,109
  207,364
  218,110
  229,373
  241,181
  253,561
  266,542
  280,157
  294,436
  309,414
  325,128
  341,614
Debt-to-equity ratio
  1.057
  5.710
  5.900
  6.080
  6.250
  6.410
  6.550
  6.680
  6.810
  6.930
  7.040
  7.140
  7.240
  7.330
  7.410
  7.490
  7.570
  7.640
  7.710
  7.770
  7.830
  7.890
  7.940
  8.000
  8.050
  8.090
  8.140
  8.180
  8.220
  8.260
  8.290
Adjusted equity ratio
  -0.177
  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
  9,335
  8,973
  9,952
  10,725
  11,530
  12,369
  13,244
  14,156
  15,108
  16,102
  17,139
  21,366
  22,500
  23,685
  24,925
  26,222
  27,581
  29,002
  30,492
  32,052
  33,686
  35,399
  37,194
  39,076
  41,049
  43,118
  45,288
  47,564
  49,952
  52,457
  55,085
Depreciation, amort., depletion, $m
  2,451
  4,880
  4,917
  4,955
  4,995
  5,036
  5,079
  5,124
  5,171
  5,220
  5,271
  1,020
  1,076
  1,134
  1,195
  1,259
  1,326
  1,396
  1,469
  1,546
  1,626
  1,710
  1,799
  1,891
  1,988
  2,090
  2,197
  2,309
  2,426
  2,549
  2,679
Funds from operations, $m
  15,350
  13,853
  14,869
  15,680
  16,525
  17,405
  18,323
  19,280
  20,279
  21,321
  22,410
  22,386
  23,575
  24,819
  26,120
  27,481
  28,906
  30,398
  31,960
  33,597
  35,312
  37,109
  38,992
  40,967
  43,037
  45,208
  47,485
  49,873
  52,378
  55,006
  57,764
Change in working capital, $m
  1,224
  -387
  -403
  -420
  -437
  -455
  -475
  -495
  -516
  -539
  -563
  -588
  -615
  -643
  -673
  -704
  -737
  -771
  -808
  -846
  -886
  -929
  -973
  -1,020
  -1,070
  -1,122
  -1,177
  -1,234
  -1,295
  -1,358
  -1,425
Cash from operations, $m
  14,126
  14,241
  15,272
  16,100
  16,962
  17,861
  18,798
  19,775
  20,795
  21,860
  22,973
  22,974
  24,190
  25,462
  26,792
  28,185
  29,643
  31,169
  32,768
  34,443
  36,198
  38,038
  39,966
  41,987
  44,107
  46,330
  48,662
  51,107
  53,673
  56,364
  59,188
Maintenance CAPEX, $m
  0
  -540
  -576
  -613
  -651
  -690
  -732
  -775
  -820
  -866
  -915
  -966
  -1,020
  -1,076
  -1,134
  -1,195
  -1,259
  -1,326
  -1,396
  -1,469
  -1,546
  -1,626
  -1,710
  -1,799
  -1,891
  -1,988
  -2,090
  -2,197
  -2,309
  -2,426
  -2,549
New CAPEX, $m
  -2,021
  -724
  -742
  -773
  -805
  -839
  -874
  -912
  -951
  -993
  -1,037
  -1,084
  -1,133
  -1,184
  -1,239
  -1,296
  -1,357
  -1,420
  -1,487
  -1,558
  -1,632
  -1,711
  -1,793
  -1,879
  -1,971
  -2,066
  -2,167
  -2,273
  -2,384
  -2,501
  -2,624
Cash from investing activities, $m
  -21,494
  -1,264
  -1,318
  -1,386
  -1,456
  -1,529
  -1,606
  -1,687
  -1,771
  -1,859
  -1,952
  -2,050
  -2,153
  -2,260
  -2,373
  -2,491
  -2,616
  -2,746
  -2,883
  -3,027
  -3,178
  -3,337
  -3,503
  -3,678
  -3,862
  -4,054
  -4,257
  -4,470
  -4,693
  -4,927
  -5,173
Free cash flow, $m
  -7,368
  12,976
  13,954
  14,714
  15,507
  16,332
  17,192
  18,089
  19,024
  20,001
  21,021
  20,924
  22,038
  23,202
  24,420
  25,694
  27,027
  28,423
  29,885
  31,416
  33,020
  34,701
  36,463
  38,309
  40,246
  42,276
  44,405
  46,638
  48,980
  51,437
  54,015
Issuance/(repayment) of debt, $m
  13,638
  -5,224
  4,198
  4,370
  4,550
  4,741
  4,942
  5,154
  5,378
  5,614
  5,863
  6,126
  6,403
  6,696
  7,004
  7,328
  7,670
  8,030
  8,410
  8,809
  9,229
  9,672
  10,137
  10,627
  11,142
  11,683
  12,253
  12,851
  13,481
  14,142
  14,838
Issuance/(repurchase) of shares, $m
  -1,663
  794
  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  
  11,717
  -4,430
  4,198
  4,370
  4,550
  4,741
  4,942
  5,154
  5,378
  5,614
  5,863
  6,126
  6,403
  6,696
  7,004
  7,328
  7,670
  8,030
  8,410
  8,809
  9,229
  9,672
  10,137
  10,627
  11,142
  11,683
  12,253
  12,851
  13,481
  14,142
  14,838
Total cash flow (excl. dividends), $m
  4,263
  8,546
  18,152
  19,084
  20,057
  21,073
  22,134
  23,243
  24,403
  25,615
  26,884
  27,051
  28,441
  29,898
  31,423
  33,022
  34,698
  36,454
  38,295
  40,225
  42,250
  44,373
  46,600
  48,936
  51,387
  53,959
  56,657
  59,489
  62,461
  65,579
  68,852
Retained Cash Flow (-), $m
  -6,571
  -9,767
  -466
  -486
  -506
  -527
  -549
  -573
  -598
  -624
  -651
  -681
  -711
  -744
  -778
  -814
  -852
  -892
  -934
  -979
  -1,025
  -1,075
  -1,126
  -1,181
  -1,238
  -1,298
  -1,361
  -1,428
  -1,498
  -1,571
  -1,649
Prev. year cash balance distribution, $m
 
  56,281
  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
 
  55,061
  17,685
  18,599
  19,551
  20,546
  21,585
  22,670
  23,805
  24,992
  26,233
  26,370
  27,730
  29,154
  30,645
  32,208
  33,845
  35,561
  37,360
  39,246
  41,224
  43,298
  45,474
  47,755
  50,149
  52,661
  55,296
  58,061
  60,963
  64,008
  67,204
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
 
  52,791
  16,190
  16,186
  16,099
  15,926
  15,665
  15,316
  14,879
  14,356
  13,753
  12,523
  11,833
  11,085
  10,288
  9,456
  8,601
  7,738
  6,880
  6,043
  5,238
  4,478
  3,773
  3,130
  2,554
  2,049
  1,613
  1,246
  943
  699
  506
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Oracle Corporation (Oracle) provides products and services that address all aspects of corporate information technology (IT) environments, including application, platform and infrastructure. The Company's businesses include cloud and on-premise software, hardware and services. Its cloud and on-premise software business consists of three segments, including cloud software and on-premise software, which includes Software as a Service (SaaS) and Platform as a Service (PaaS) offerings, cloud infrastructure as a service (IaaS) and software license updates and product support. Its hardware business consists of two segments, including hardware products and hardware support. The Company's services business includes the remainder of the Company's segments. Its services business includes activities, such as consulting services, enhanced support services and education services, among others.

FINANCIAL RATIOS  of  Oracle (ORCL)

Valuation Ratios
P/E Ratio 22.5
Price to Sales 5.6
Price to Book 3.9
Price to Tangible Book
Price to Cash Flow 14.9
Price to Free Cash Flow 17.3
Growth Rates
Sales Growth Rate 1.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 70%
Cap. Spend. - 3 Yr. Gr. Rate 28.4%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 87.5%
Total Debt to Equity 105.7%
Interest Coverage 8
Management Effectiveness
Return On Assets 8.6%
Ret/ On Assets - 3 Yr. Avg. 9.5%
Return On Total Capital 9.3%
Ret/ On T. Cap. - 3 Yr. Avg. 10.6%
Return On Equity 18.5%
Return On Equity - 3 Yr. Avg. 19.3%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 80.2%
Gross Margin - 3 Yr. Avg. 80.1%
EBITDA Margin 41.3%
EBITDA Margin - 3 Yr. Avg. 42.3%
Operating Margin 33.7%
Oper. Margin - 3 Yr. Avg. 34.7%
Pre-Tax Margin 30.5%
Pre-Tax Margin - 3 Yr. Avg. 31.7%
Net Profit Margin 24.7%
Net Profit Margin - 3 Yr. Avg. 24.9%
Effective Tax Rate 18.9%
Eff/ Tax Rate - 3 Yr. Avg. 21.2%
Payout Ratio 28.2%

ORCL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ORCL stock intrinsic value calculation we used $37728 million for the last fiscal year's total revenue generated by Oracle. The default revenue input number comes from 2017 income statement of Oracle. 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 ORCL stock valuation model: a) initial revenue growth rate of 6.5% 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 ORCL is calculated based on our internal credit rating of Oracle, 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 Oracle.
    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 ORCL stock the variable cost ratio is equal to 66%.

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 ORCL 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 3.5% for Oracle.

Corporate tax rate of 27% is the nominal tax rate for Oracle. 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 ORCL 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 ORCL are equal to 29.1%.

Life of production assets of 20.3 years is the average useful life of capital assets used in Oracle 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 ORCL is equal to -15.8%. 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 - $53860 million for Oracle - 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 4194.58 million for Oracle 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 Oracle at the current share price and the inputted number of shares is $212.7 billion.

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▶ Should You Buy Oracle After (Another) Post-Earnings Dip?   [Dec-26-17 07:45AM  Motley Fool]
▶ Oracle Corporations Dip Is an Excellent Buy Opportunity   [Dec-21-17 01:38PM  InvestorPlace]
▶ [$$] Oracle to Buy Australian Software Maker Aconex   [01:03AM  The Wall Street Journal]
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▶ Campbell, Hershey, Humana Lead Frenzy Of Year-End M&A Activity   [04:06PM  Investor's Business Daily]
▶ Top 8 Companies Owned by Oracle (ORCL)   [12:08PM  Investopedia]
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▶ Oracle to buy Australian construction software company in $1.2B deal   [10:04AM  American City Business Journals]
Financial statements of ORCL
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