Intrinsic value of Koninklijke Philips ADR - PHG

Previous Close

$37.52

  Intrinsic Value

$461.02

stock screener

  Rating & Target

str. buy

+999%

Previous close

$37.52

 
Intrinsic value

$461.02

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of PHG 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 2.8

 

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, %
  16.40
  15.26
  14.23
  13.31
  12.48
  11.73
  11.06
  10.45
  9.91
  9.42
  8.97
  8.58
  8.22
  7.90
  7.61
  7.35
  7.11
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
Revenue, $m
  24,845
  28,636
  32,712
  37,067
  41,692
  46,584
  51,735
  57,143
  62,804
  68,718
  74,885
  81,309
  87,992
  94,941
  102,165
  109,671
  117,471
  125,578
  134,006
  142,769
  151,887
  161,376
  171,256
  181,549
  192,278
  203,465
  215,137
  227,320
  240,042
  253,333
Variable operating expenses, $m
  22,292
  25,491
  28,931
  32,605
  36,508
  40,636
  44,983
  49,546
  54,323
  59,314
  63,191
  68,611
  74,251
  80,115
  86,210
  92,544
  99,126
  105,967
  113,079
  120,474
  128,167
  136,174
  144,512
  153,198
  162,250
  171,691
  181,540
  191,820
  202,556
  213,771
Fixed operating expenses, $m
  186
  190
  194
  199
  203
  207
  212
  217
  221
  226
  231
  236
  242
  247
  252
  258
  263
  269
  275
  281
  287
  294
  300
  307
  314
  320
  328
  335
  342
  350
Total operating expenses, $m
  22,478
  25,681
  29,125
  32,804
  36,711
  40,843
  45,195
  49,763
  54,544
  59,540
  63,422
  68,847
  74,493
  80,362
  86,462
  92,802
  99,389
  106,236
  113,354
  120,755
  128,454
  136,468
  144,812
  153,505
  162,564
  172,011
  181,868
  192,155
  202,898
  214,121
Operating income, $m
  2,367
  2,955
  3,587
  4,263
  4,981
  5,740
  6,540
  7,380
  8,260
  9,178
  11,463
  12,461
  13,500
  14,580
  15,702
  16,869
  18,081
  19,342
  20,652
  22,014
  23,432
  24,908
  26,444
  28,045
  29,714
  31,454
  33,269
  35,165
  37,144
  39,212
EBITDA, $m
  4,509
  5,222
  5,988
  6,807
  7,676
  8,596
  9,565
  10,583
  11,648
  12,761
  13,921
  15,130
  16,388
  17,696
  19,056
  20,469
  21,937
  23,463
  25,050
  26,700
  28,417
  30,204
  32,065
  34,004
  36,025
  38,132
  40,331
  42,626
  45,023
  47,527
Interest expense (income), $m
  328
  311
  456
  612
  780
  960
  1,150
  1,352
  1,564
  1,787
  2,020
  2,264
  2,518
  2,783
  3,058
  3,345
  3,642
  3,952
  4,273
  4,607
  4,955
  5,316
  5,692
  6,083
  6,490
  6,914
  7,356
  7,817
  8,298
  8,800
  9,325
Earnings before tax, $m
  2,056
  2,499
  2,975
  3,483
  4,021
  4,590
  5,188
  5,816
  6,472
  7,158
  9,199
  9,943
  10,717
  11,521
  12,358
  13,227
  14,130
  15,068
  16,044
  17,060
  18,116
  19,216
  20,361
  21,555
  22,800
  24,098
  25,452
  26,867
  28,344
  29,888
Tax expense, $m
  555
  675
  803
  940
  1,086
  1,239
  1,401
  1,570
  1,748
  1,933
  2,484
  2,685
  2,894
  3,111
  3,337
  3,571
  3,815
  4,068
  4,332
  4,606
  4,891
  5,188
  5,498
  5,820
  6,156
  6,506
  6,872
  7,254
  7,653
  8,070
Net income, $m
  1,501
  1,824
  2,172
  2,542
  2,936
  3,351
  3,788
  4,246
  4,725
  5,225
  6,715
  7,258
  7,823
  8,411
  9,021
  9,655
  10,315
  11,000
  11,712
  12,454
  13,225
  14,028
  14,864
  15,735
  16,644
  17,591
  18,580
  19,613
  20,691
  21,818

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
  35,392
  40,793
  46,599
  52,802
  59,391
  66,359
  73,697
  81,400
  89,464
  97,889
  106,674
  115,824
  125,345
  135,244
  145,534
  156,226
  167,338
  178,886
  190,891
  203,375
  216,363
  229,880
  243,955
  258,617
  273,900
  289,836
  306,463
  323,818
  341,940
  360,874
Adjusted assets (=assets-cash), $m
  35,392
  40,793
  46,599
  52,802
  59,391
  66,359
  73,697
  81,400
  89,464
  97,889
  106,674
  115,824
  125,345
  135,244
  145,534
  156,226
  167,338
  178,886
  190,891
  203,375
  216,363
  229,880
  243,955
  258,617
  273,900
  289,836
  306,463
  323,818
  341,940
  360,874
Revenue / Adjusted assets
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
  0.702
Average production assets, $m
  10,112
  11,655
  13,314
  15,086
  16,969
  18,960
  21,056
  23,257
  25,561
  27,968
  30,478
  33,093
  35,813
  38,641
  41,581
  44,636
  47,811
  51,110
  54,540
  58,107
  61,818
  65,680
  69,701
  73,891
  78,257
  82,810
  87,561
  92,519
  97,697
  103,107
Working capital, $m
  2,683
  3,093
  3,533
  4,003
  4,503
  5,031
  5,587
  6,171
  6,783
  7,422
  8,088
  8,781
  9,503
  10,254
  11,034
  11,844
  12,687
  13,562
  14,473
  15,419
  16,404
  17,429
  18,496
  19,607
  20,766
  21,974
  23,235
  24,551
  25,925
  27,360
Total debt, $m
  8,292
  11,133
  14,187
  17,450
  20,916
  24,580
  28,440
  32,492
  36,734
  41,165
  45,787
  50,600
  55,607
  60,814
  66,227
  71,851
  77,695
  83,770
  90,085
  96,651
  103,483
  110,593
  117,996
  125,708
  133,747
  142,130
  150,875
  160,004
  169,537
  179,495
Total liabilities, $m
  18,616
  21,457
  24,511
  27,774
  31,240
  34,905
  38,764
  42,816
  47,058
  51,490
  56,111
  60,924
  65,931
  71,138
  76,551
  82,175
  88,020
  94,094
  100,409
  106,975
  113,807
  120,917
  128,320
  136,033
  144,071
  152,454
  161,199
  170,328
  179,861
  189,819
Total equity, $m
  16,776
  19,336
  22,088
  25,028
  28,151
  31,454
  34,932
  38,584
  42,406
  46,399
  50,564
  54,901
  59,413
  64,106
  68,983
  74,051
  79,318
  84,792
  90,482
  96,400
  102,556
  108,963
  115,634
  122,585
  129,828
  137,382
  145,263
  153,490
  162,080
  171,054
Total liabilities and equity, $m
  35,392
  40,793
  46,599
  52,802
  59,391
  66,359
  73,696
  81,400
  89,464
  97,889
  106,675
  115,825
  125,344
  135,244
  145,534
  156,226
  167,338
  178,886
  190,891
  203,375
  216,363
  229,880
  243,954
  258,618
  273,899
  289,836
  306,462
  323,818
  341,941
  360,873
Debt-to-equity ratio
  0.490
  0.580
  0.640
  0.700
  0.740
  0.780
  0.810
  0.840
  0.870
  0.890
  0.910
  0.920
  0.940
  0.950
  0.960
  0.970
  0.980
  0.990
  1.000
  1.000
  1.010
  1.010
  1.020
  1.030
  1.030
  1.030
  1.040
  1.040
  1.050
  1.050
Adjusted equity ratio
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,501
  1,824
  2,172
  2,542
  2,936
  3,351
  3,788
  4,246
  4,725
  5,225
  6,715
  7,258
  7,823
  8,411
  9,021
  9,655
  10,315
  11,000
  11,712
  12,454
  13,225
  14,028
  14,864
  15,735
  16,644
  17,591
  18,580
  19,613
  20,691
  21,818
Depreciation, amort., depletion, $m
  2,142
  2,267
  2,401
  2,544
  2,695
  2,856
  3,025
  3,202
  3,388
  3,582
  2,458
  2,669
  2,888
  3,116
  3,353
  3,600
  3,856
  4,122
  4,398
  4,686
  4,985
  5,297
  5,621
  5,959
  6,311
  6,678
  7,061
  7,461
  7,879
  8,315
Funds from operations, $m
  3,643
  4,091
  4,572
  5,086
  5,631
  6,207
  6,813
  7,448
  8,113
  8,808
  9,173
  9,927
  10,711
  11,527
  12,374
  13,255
  14,170
  15,122
  16,111
  17,140
  18,210
  19,324
  20,485
  21,694
  22,955
  24,270
  25,642
  27,074
  28,570
  30,133
Change in working capital, $m
  378
  409
  440
  470
  500
  528
  556
  584
  611
  639
  666
  694
  722
  751
  780
  811
  842
  876
  910
  947
  985
  1,025
  1,067
  1,112
  1,159
  1,208
  1,261
  1,316
  1,374
  1,435
Cash from operations, $m
  3,265
  3,682
  4,132
  4,616
  5,131
  5,678
  6,256
  6,864
  7,502
  8,169
  8,507
  9,233
  9,990
  10,776
  11,594
  12,444
  13,328
  14,246
  15,201
  16,193
  17,225
  18,300
  19,418
  20,582
  21,796
  23,061
  24,381
  25,758
  27,196
  28,698
Maintenance CAPEX, $m
  -700
  -815
  -940
  -1,074
  -1,217
  -1,368
  -1,529
  -1,698
  -1,876
  -2,061
  -2,256
  -2,458
  -2,669
  -2,888
  -3,116
  -3,353
  -3,600
  -3,856
  -4,122
  -4,398
  -4,686
  -4,985
  -5,297
  -5,621
  -5,959
  -6,311
  -6,678
  -7,061
  -7,461
  -7,879
New CAPEX, $m
  -1,429
  -1,543
  -1,659
  -1,772
  -1,883
  -1,991
  -2,097
  -2,201
  -2,304
  -2,407
  -2,510
  -2,614
  -2,720
  -2,828
  -2,940
  -3,055
  -3,175
  -3,300
  -3,430
  -3,567
  -3,711
  -3,862
  -4,021
  -4,189
  -4,366
  -4,553
  -4,750
  -4,958
  -5,178
  -5,409
Cash from investing activities, $m
  -2,129
  -2,358
  -2,599
  -2,846
  -3,100
  -3,359
  -3,626
  -3,899
  -4,180
  -4,468
  -4,766
  -5,072
  -5,389
  -5,716
  -6,056
  -6,408
  -6,775
  -7,156
  -7,552
  -7,965
  -8,397
  -8,847
  -9,318
  -9,810
  -10,325
  -10,864
  -11,428
  -12,019
  -12,639
  -13,288
Free cash flow, $m
  1,136
  1,323
  1,533
  1,770
  2,032
  2,319
  2,631
  2,965
  3,322
  3,701
  3,742
  4,161
  4,601
  5,060
  5,538
  6,036
  6,554
  7,091
  7,649
  8,228
  8,829
  9,452
  10,100
  10,772
  11,471
  12,197
  12,952
  13,738
  14,557
  15,409
Issuance/(repayment) of debt, $m
  2,630
  2,841
  3,054
  3,263
  3,466
  3,665
  3,860
  4,052
  4,242
  4,431
  4,621
  4,813
  5,008
  5,207
  5,412
  5,624
  5,845
  6,074
  6,315
  6,567
  6,831
  7,110
  7,403
  7,713
  8,039
  8,383
  8,746
  9,129
  9,533
  9,959
Issuance/(repurchase) of shares, $m
  871
  736
  580
  398
  188
  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  
  3,501
  3,577
  3,634
  3,661
  3,654
  3,665
  3,860
  4,052
  4,242
  4,431
  4,621
  4,813
  5,008
  5,207
  5,412
  5,624
  5,845
  6,074
  6,315
  6,567
  6,831
  7,110
  7,403
  7,713
  8,039
  8,383
  8,746
  9,129
  9,533
  9,959
Total cash flow (excl. dividends), $m
  4,637
  4,900
  5,168
  5,430
  5,686
  5,984
  6,490
  7,017
  7,564
  8,132
  8,363
  8,974
  9,608
  10,267
  10,950
  11,660
  12,398
  13,165
  13,964
  14,795
  15,660
  16,562
  17,503
  18,485
  19,509
  20,580
  21,698
  22,867
  24,089
  25,368
Retained Cash Flow (-), $m
  -2,371
  -2,560
  -2,752
  -2,940
  -3,123
  -3,303
  -3,478
  -3,651
  -3,823
  -3,993
  -4,164
  -4,337
  -4,513
  -4,692
  -4,877
  -5,068
  -5,267
  -5,474
  -5,690
  -5,918
  -6,156
  -6,407
  -6,671
  -6,950
  -7,244
  -7,554
  -7,881
  -8,226
  -8,590
  -8,974
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
  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
  2,265
  2,340
  2,416
  2,490
  2,562
  2,682
  3,012
  3,366
  3,741
  4,139
  4,198
  4,637
  5,096
  5,575
  6,073
  6,592
  7,131
  7,691
  8,273
  8,877
  9,504
  10,155
  10,832
  11,535
  12,265
  13,026
  13,817
  14,641
  15,499
  16,394
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
  2,172
  2,142
  2,102
  2,050
  1,986
  1,946
  2,035
  2,104
  2,149
  2,170
  1,994
  1,979
  1,938
  1,871
  1,783
  1,675
  1,552
  1,416
  1,274
  1,128
  983
  843
  710
  587
  477
  380
  297
  227
  169
  123
Current shareholders' claim on cash, %
  92.1
  86.6
  83.1
  81.0
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1

Koninklijke Philips N.V. is the Netherlands-based health technology company. The Company's segments include Personal Health businesses, Diagnosis & Treatment businesses, Connected Care & Health Informatics businesses, HealthTech Other and Legacy Items. The Personal Health businesses segment is engaged in the health continuum, delivering integrated, connected solutions that support healthier lifestyles and those living with chronic disease. The Diagnosis & Treatment businesses segment delivers precision medicine and treatment, and therapy. The Connected Care & Health Informatics businesses segment provides consumers, care givers and clinicians with digital solutions that facilitate care by enabling precision medicine and population health management. The HealthTech Other segment comprises such items, as innovation, emerging businesses, royalties, among others. The Legacy Items segment consists mainly of separation costs, legacy legal items, legacy pension costs, among others.

FINANCIAL RATIOS  of  Koninklijke Philips ADR (PHG)

Valuation Ratios
P/E Ratio 22.7
Price to Sales 1.3
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 15.1
Price to Free Cash Flow 25.2
Growth Rates
Sales Growth Rate 1.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -9.2%
Cap. Spend. - 3 Yr. Gr. Rate 0.3%
Financial Strength
Quick Ratio 2
Current Ratio 0.2
LT Debt to Equity 31.9%
Total Debt to Equity 44.5%
Interest Coverage 5
Management Effectiveness
Return On Assets 5.3%
Ret/ On Assets - 3 Yr. Avg. 3.4%
Return On Total Capital 8.1%
Ret/ On T. Cap. - 3 Yr. Avg. 5%
Return On Equity 11.9%
Return On Equity - 3 Yr. Avg. 7.1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 43.3%
Gross Margin - 3 Yr. Avg. 40.8%
EBITDA Margin 12.1%
EBITDA Margin - 3 Yr. Avg. 9.5%
Operating Margin 7.6%
Oper. Margin - 3 Yr. Avg. 4.6%
Pre-Tax Margin 5.7%
Pre-Tax Margin - 3 Yr. Avg. 3%
Net Profit Margin 5.9%
Net Profit Margin - 3 Yr. Avg. 3.5%
Effective Tax Rate 23.5%
Eff/ Tax Rate - 3 Yr. Avg. 25.3%
Payout Ratio 22.8%

PHG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PHG stock intrinsic value calculation we used $21344.5378151 million for the last fiscal year's total revenue generated by Koninklijke Philips ADR. The default revenue input number comes from 0001 income statement of Koninklijke Philips ADR. 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 PHG stock valuation model: a) initial revenue growth rate of 16.4% 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 4.3%, whose default value for PHG is calculated based on our internal credit rating of Koninklijke Philips ADR, 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 Koninklijke Philips ADR.
    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 PHG stock the variable cost ratio is equal to 90.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $182 million in the base year in the intrinsic value calculation for PHG 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 5.5% for Koninklijke Philips ADR.

Corporate tax rate of 27% is the nominal tax rate for Koninklijke Philips ADR. 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 PHG 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 PHG are equal to 40.7%.

Life of production assets of 12.4 years is the average useful life of capital assets used in Koninklijke Philips ADR 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 PHG is equal to 10.8%. 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 - $14404.5618247 million for Koninklijke Philips ADR - 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 74.935 million for Koninklijke Philips ADR 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 Koninklijke Philips ADR at the current share price and the inputted number of shares is $2.8 billion.

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COMPANY NEWS

▶ Why Koninklijke Philips N.V. Shares Fell 18% Last Month   [Nov-11-18 08:10PM  Motley Fool]
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▶ The best electric toothbrush   [Aug-17-18 02:30PM  Engadget]
▶ How Much Money Does Koninklijke Philips NV (AMS:PHIA) Make?   [Aug-16-18 09:46AM  Simply Wall St.]
▶ Philips now eyes 1,000-plus downtown jobs, juicing an already wild hiring spree   [Aug-09-18 03:04PM  American City Business Journals]
▶ [$$] Gibson Settles With Unsecured Creditors   [Aug-01-18 05:27PM  The Wall Street Journal]
▶ Royal Philips NV to Host Earnings Call   [Jul-23-18 08:00AM  ACCESSWIRE]
▶ Philips: 2Q Earnings Snapshot   [07:13AM  Associated Press]
▶ [$$] Philips Profit Falls   [02:14AM  The Wall Street Journal]
▶ EU's Biggest Penalties on Global Tech Companies   [Jul-20-18 07:41AM  Investopedia]
▶ [$$] Philips Complains About ' Quid Pro Quo' Payments in Gibson Bankruptcy   [Jul-19-18 02:34PM  The Wall Street Journal]
▶ Amazon Prime Day: 3 Winners, 1 Loser   [Jul-18-18 03:10PM  InvestorPlace]
▶ Brazil police search Philips office in fraud probe   [Jul-04-18 05:48PM  Associated Press]

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