Intrinsic value of Schlumberger - SLB

Previous Close

$41.44

  Intrinsic Value

$33.34

stock screener

  Rating & Target

hold

-20%

Previous close

$41.44

 
Intrinsic value

$33.34

 
Up/down potential

-20%

 
Rating

hold

We calculate the intrinsic value of SLB 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 57.4

 

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, %
  11.30
  10.67
  10.10
  9.59
  9.13
  8.72
  8.35
  8.01
  7.71
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
Revenue, $m
  33,880
  37,495
  41,283
  45,243
  49,375
  53,681
  58,162
  62,823
  67,668
  72,702
  77,935
  83,372
  89,024
  94,901
  101,014
  107,375
  113,997
  120,895
  128,083
  135,577
  143,394
  151,552
  160,070
  168,967
  178,265
  187,984
  198,149
  208,782
  219,909
  231,557
Variable operating expenses, $m
  24,538
  26,780
  29,130
  31,587
  34,151
  36,822
  39,602
  42,493
  45,499
  48,622
  48,348
  51,721
  55,228
  58,873
  62,666
  66,612
  70,720
  74,999
  79,458
  84,107
  88,957
  94,018
  99,302
  104,822
  110,589
  116,619
  122,925
  129,521
  136,424
  143,650
Fixed operating expenses, $m
  9,267
  9,471
  9,680
  9,893
  10,110
  10,333
  10,560
  10,792
  11,030
  11,273
  11,521
  11,774
  12,033
  12,298
  12,568
  12,845
  13,127
  13,416
  13,711
  14,013
  14,321
  14,636
  14,958
  15,287
  15,624
  15,967
  16,319
  16,678
  17,045
  17,420
Total operating expenses, $m
  33,805
  36,251
  38,810
  41,480
  44,261
  47,155
  50,162
  53,285
  56,529
  59,895
  59,869
  63,495
  67,261
  71,171
  75,234
  79,457
  83,847
  88,415
  93,169
  98,120
  103,278
  108,654
  114,260
  120,109
  126,213
  132,586
  139,244
  146,199
  153,469
  161,070
Operating income, $m
  74
  1,243
  2,473
  3,763
  5,114
  6,526
  8,000
  9,537
  11,139
  12,808
  18,066
  19,877
  21,764
  23,730
  25,780
  27,918
  30,150
  32,480
  34,913
  37,457
  40,116
  42,898
  45,810
  48,858
  52,052
  55,398
  58,905
  62,583
  66,440
  70,487
EBITDA, $m
  6,286
  7,741
  9,272
  10,877
  12,556
  14,310
  16,140
  18,048
  20,034
  22,103
  24,257
  26,500
  28,835
  31,268
  33,804
  36,448
  39,205
  42,083
  45,087
  48,226
  51,507
  54,937
  58,525
  62,280
  66,212
  70,330
  74,645
  79,168
  83,909
  88,881
Interest expense (income), $m
  599
  983
  1,196
  1,421
  1,657
  1,903
  2,161
  2,429
  2,708
  2,999
  3,300
  3,614
  3,940
  4,279
  4,631
  4,997
  5,378
  5,774
  6,187
  6,616
  7,064
  7,531
  8,018
  8,526
  9,057
  9,611
  10,190
  10,796
  11,429
  12,092
  12,785
Earnings before tax, $m
  -908
  47
  1,052
  2,106
  3,211
  4,365
  5,571
  6,829
  8,141
  9,507
  14,452
  15,937
  17,485
  19,099
  20,783
  22,541
  24,376
  26,293
  28,297
  30,392
  32,585
  34,880
  37,283
  39,801
  42,440
  45,207
  48,109
  51,154
  54,349
  57,703
Tax expense, $m
  0
  13
  284
  569
  867
  1,179
  1,504
  1,844
  2,198
  2,567
  3,902
  4,303
  4,721
  5,157
  5,611
  6,086
  6,581
  7,099
  7,640
  8,206
  8,798
  9,418
  10,067
  10,746
  11,459
  12,206
  12,990
  13,812
  14,674
  15,580
Net income, $m
  -908
  35
  768
  1,538
  2,344
  3,187
  4,067
  4,985
  5,943
  6,940
  10,550
  11,634
  12,764
  13,942
  15,172
  16,455
  17,794
  19,194
  20,657
  22,186
  23,787
  25,462
  27,217
  29,055
  30,982
  33,001
  35,120
  37,342
  39,675
  42,123

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
  80,094
  88,640
  97,595
  106,957
  116,726
  126,905
  137,499
  148,517
  159,971
  171,874
  184,243
  197,097
  210,459
  224,352
  238,803
  253,841
  269,497
  285,803
  302,796
  320,512
  338,993
  358,279
  378,416
  399,450
  421,430
  444,407
  468,436
  493,574
  519,880
  547,417
Adjusted assets (=assets-cash), $m
  80,094
  88,640
  97,595
  106,957
  116,726
  126,905
  137,499
  148,517
  159,971
  171,874
  184,243
  197,097
  210,459
  224,352
  238,803
  253,841
  269,497
  285,803
  302,796
  320,512
  338,993
  358,279
  378,416
  399,450
  421,430
  444,407
  468,436
  493,574
  519,880
  547,417
Revenue / Adjusted assets
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
Average production assets, $m
  33,372
  36,932
  40,664
  44,564
  48,635
  52,875
  57,290
  61,880
  66,653
  71,612
  76,766
  82,122
  87,689
  93,478
  99,499
  105,764
  112,287
  119,081
  126,161
  133,543
  141,243
  149,279
  157,669
  166,433
  175,591
  185,164
  195,176
  205,650
  216,611
  228,084
Working capital, $m
  1,626
  1,800
  1,982
  2,172
  2,370
  2,577
  2,792
  3,015
  3,248
  3,490
  3,741
  4,002
  4,273
  4,555
  4,849
  5,154
  5,472
  5,803
  6,148
  6,508
  6,883
  7,275
  7,683
  8,110
  8,557
  9,023
  9,511
  10,022
  10,556
  11,115
Total debt, $m
  22,140
  26,310
  30,680
  35,249
  40,016
  44,983
  50,153
  55,530
  61,120
  66,928
  72,964
  79,237
  85,758
  92,538
  99,590
  106,928
  114,568
  122,526
  130,818
  139,464
  148,482
  157,894
  167,721
  177,985
  188,712
  199,925
  211,651
  223,918
  236,756
  250,193
Total liabilities, $m
  39,086
  43,256
  47,626
  52,195
  56,962
  61,929
  67,099
  72,476
  78,066
  83,874
  89,910
  96,183
  102,704
  109,484
  116,536
  123,874
  131,514
  139,472
  147,764
  156,410
  165,428
  174,840
  184,667
  194,931
  205,658
  216,871
  228,597
  240,864
  253,702
  267,139
Total equity, $m
  41,008
  45,384
  49,969
  54,762
  59,764
  64,975
  70,399
  76,041
  81,905
  87,999
  94,332
  100,914
  107,755
  114,868
  122,267
  129,967
  137,982
  146,331
  155,031
  164,102
  173,564
  183,439
  193,749
  204,518
  215,772
  227,536
  239,839
  252,710
  266,179
  280,277
Total liabilities and equity, $m
  80,094
  88,640
  97,595
  106,957
  116,726
  126,904
  137,498
  148,517
  159,971
  171,873
  184,242
  197,097
  210,459
  224,352
  238,803
  253,841
  269,496
  285,803
  302,795
  320,512
  338,992
  358,279
  378,416
  399,449
  421,430
  444,407
  468,436
  493,574
  519,881
  547,416
Debt-to-equity ratio
  0.540
  0.580
  0.610
  0.640
  0.670
  0.690
  0.710
  0.730
  0.750
  0.760
  0.770
  0.790
  0.800
  0.810
  0.810
  0.820
  0.830
  0.840
  0.840
  0.850
  0.860
  0.860
  0.870
  0.870
  0.870
  0.880
  0.880
  0.890
  0.890
  0.890
Adjusted equity ratio
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -908
  35
  768
  1,538
  2,344
  3,187
  4,067
  4,985
  5,943
  6,940
  10,550
  11,634
  12,764
  13,942
  15,172
  16,455
  17,794
  19,194
  20,657
  22,186
  23,787
  25,462
  27,217
  29,055
  30,982
  33,001
  35,120
  37,342
  39,675
  42,123
Depreciation, amort., depletion, $m
  6,211
  6,498
  6,799
  7,114
  7,442
  7,784
  8,140
  8,510
  8,895
  9,295
  6,191
  6,623
  7,072
  7,539
  8,024
  8,529
  9,055
  9,603
  10,174
  10,770
  11,391
  12,039
  12,715
  13,422
  14,161
  14,933
  15,740
  16,585
  17,469
  18,394
Funds from operations, $m
  5,303
  6,533
  7,567
  8,651
  9,786
  10,971
  12,207
  13,495
  14,838
  16,236
  16,741
  18,257
  19,836
  21,481
  23,196
  24,984
  26,850
  28,797
  30,831
  32,956
  35,178
  37,501
  39,932
  42,477
  45,142
  47,934
  50,860
  53,927
  57,143
  60,517
Change in working capital, $m
  165
  174
  182
  190
  198
  207
  215
  224
  233
  242
  251
  261
  271
  282
  293
  305
  318
  331
  345
  360
  375
  392
  409
  427
  446
  467
  488
  510
  534
  559
Cash from operations, $m
  5,138
  6,359
  7,385
  8,461
  9,588
  10,764
  11,992
  13,272
  14,605
  15,994
  16,490
  17,996
  19,564
  21,199
  22,902
  24,679
  26,532
  28,466
  30,486
  32,596
  34,802
  37,109
  39,523
  42,050
  44,696
  47,467
  50,372
  53,417
  56,609
  59,958
Maintenance CAPEX, $m
  -2,418
  -2,691
  -2,978
  -3,279
  -3,594
  -3,922
  -4,264
  -4,620
  -4,990
  -5,375
  -5,775
  -6,191
  -6,623
  -7,072
  -7,539
  -8,024
  -8,529
  -9,055
  -9,603
  -10,174
  -10,770
  -11,391
  -12,039
  -12,715
  -13,422
  -14,161
  -14,933
  -15,740
  -16,585
  -17,469
New CAPEX, $m
  -3,394
  -3,561
  -3,731
  -3,901
  -4,070
  -4,241
  -4,414
  -4,591
  -4,772
  -4,959
  -5,154
  -5,356
  -5,567
  -5,789
  -6,021
  -6,266
  -6,523
  -6,794
  -7,080
  -7,382
  -7,700
  -8,036
  -8,390
  -8,764
  -9,158
  -9,574
  -10,012
  -10,474
  -10,961
  -11,473
Cash from investing activities, $m
  -5,812
  -6,252
  -6,709
  -7,180
  -7,664
  -8,163
  -8,678
  -9,211
  -9,762
  -10,334
  -10,929
  -11,547
  -12,190
  -12,861
  -13,560
  -14,290
  -15,052
  -15,849
  -16,683
  -17,556
  -18,470
  -19,427
  -20,429
  -21,479
  -22,580
  -23,735
  -24,945
  -26,214
  -27,546
  -28,942
Free cash flow, $m
  -674
  107
  676
  1,281
  1,923
  2,601
  3,314
  4,061
  4,843
  5,659
  5,561
  6,449
  7,374
  8,338
  9,343
  10,389
  11,480
  12,617
  13,803
  15,040
  16,333
  17,683
  19,095
  20,571
  22,116
  23,733
  25,427
  27,203
  29,064
  31,016
Issuance/(repayment) of debt, $m
  3,941
  4,170
  4,370
  4,569
  4,767
  4,967
  5,170
  5,377
  5,589
  5,809
  6,036
  6,273
  6,521
  6,780
  7,052
  7,338
  7,640
  7,957
  8,292
  8,646
  9,018
  9,412
  9,827
  10,264
  10,726
  11,213
  11,726
  12,267
  12,837
  13,438
Issuance/(repurchase) of shares, $m
  5,074
  4,341
  3,817
  3,256
  2,658
  2,025
  1,357
  656
  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  
  9,015
  8,511
  8,187
  7,825
  7,425
  6,992
  6,527
  6,033
  5,589
  5,809
  6,036
  6,273
  6,521
  6,780
  7,052
  7,338
  7,640
  7,957
  8,292
  8,646
  9,018
  9,412
  9,827
  10,264
  10,726
  11,213
  11,726
  12,267
  12,837
  13,438
Total cash flow (excl. dividends), $m
  8,342
  8,619
  8,863
  9,106
  9,348
  9,593
  9,841
  10,094
  10,432
  11,468
  11,597
  12,722
  13,895
  15,118
  16,395
  17,727
  19,119
  20,574
  22,095
  23,686
  25,351
  27,095
  28,921
  30,835
  32,842
  34,946
  37,154
  39,470
  41,901
  44,454
Retained Cash Flow (-), $m
  -5,074
  -4,376
  -4,585
  -4,793
  -5,002
  -5,211
  -5,424
  -5,641
  -5,864
  -6,094
  -6,333
  -6,582
  -6,841
  -7,113
  -7,399
  -7,699
  -8,016
  -8,349
  -8,700
  -9,071
  -9,462
  -9,875
  -10,310
  -10,769
  -11,254
  -11,764
  -12,303
  -12,871
  -13,469
  -14,099
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
  3,267
  4,243
  4,278
  4,312
  4,347
  4,381
  4,417
  4,453
  4,568
  5,374
  5,264
  6,140
  7,054
  8,005
  8,996
  10,028
  11,104
  12,225
  13,395
  14,615
  15,889
  17,220
  18,611
  20,066
  21,588
  23,182
  24,851
  26,599
  28,433
  30,355
Discount rate, %
  4.60
  4.83
  5.07
  5.33
  5.59
  5.87
  6.16
  6.47
  6.80
  7.14
  7.49
  7.87
  8.26
  8.67
  9.11
  9.56
  10.04
  10.54
  11.07
  11.62
  12.21
  12.82
  13.46
  14.13
  14.84
  15.58
  16.36
  17.17
  18.03
  18.93
PV of cash for distribution, $m
  3,124
  3,861
  3,688
  3,504
  3,311
  3,111
  2,906
  2,696
  2,528
  2,697
  2,378
  2,475
  2,514
  2,498
  2,433
  2,326
  2,183
  2,012
  1,822
  1,621
  1,415
  1,213
  1,020
  841
  680
  538
  416
  314
  232
  167
Current shareholders' claim on cash, %
  91.9
  86.0
  81.6
  78.3
  76.0
  74.3
  73.4
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9
  72.9

Schlumberger N.V. provides technology for reservoir characterization, drilling, production and processing to the oil and gas industry. The Company's segments include Reservoir Characterization Group, Drilling Group, Production Group and Cameron Group. The Reservoir Characterization Group consists of the principal technologies involved in finding and defining hydrocarbon resources. The Drilling Group consists of the principal technologies involved in the drilling and positioning of oil and gas wells. The Production Group consists of the principal technologies involved in the lifetime production of oil and gas reservoirs and includes Well Services, Completions, Artificial Lift, Integrated Production Services (IPS) and Schlumberger Production Management (SPM). The Cameron Group consists of the principal technologies involved in pressure and flow control for drilling and intervention rigs, oil and gas wells and production facilities.

FINANCIAL RATIOS  of  Schlumberger (SLB)

Valuation Ratios
P/E Ratio -34.2
Price to Sales 2.1
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 9.2
Price to Free Cash Flow 13.7
Growth Rates
Sales Growth Rate -21.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14.7%
Cap. Spend. - 3 Yr. Gr. Rate -12.2%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 40.1%
Total Debt to Equity 47.8%
Interest Coverage -2
Management Effectiveness
Return On Assets -1.6%
Ret/ On Assets - 3 Yr. Avg. 3.5%
Return On Total Capital -2.9%
Ret/ On T. Cap. - 3 Yr. Avg. 3.8%
Return On Equity -4.4%
Return On Equity - 3 Yr. Avg. 5.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 14.2%
Gross Margin - 3 Yr. Avg. 19.2%
EBITDA Margin 10%
EBITDA Margin - 3 Yr. Avg. 18.5%
Operating Margin -4.6%
Oper. Margin - 3 Yr. Avg. 6.6%
Pre-Tax Margin -6.9%
Pre-Tax Margin - 3 Yr. Avg. 5.7%
Net Profit Margin -6.1%
Net Profit Margin - 3 Yr. Avg. 3.7%
Effective Tax Rate 14.6%
Eff/ Tax Rate - 3 Yr. Avg. 21.9%
Payout Ratio -156.9%

SLB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SLB stock intrinsic value calculation we used $30440 million for the last fiscal year's total revenue generated by Schlumberger. The default revenue input number comes from 0001 income statement of Schlumberger. 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 SLB stock valuation model: a) initial revenue growth rate of 11.3% 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 4.6%, whose default value for SLB is calculated based on our internal credit rating of Schlumberger, 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 Schlumberger.
    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 SLB stock the variable cost ratio is equal to 73.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9068 million in the base year in the intrinsic value calculation for SLB 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 Schlumberger.

Corporate tax rate of 27% is the nominal tax rate for Schlumberger. 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 SLB 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 SLB are equal to 98.5%.

Life of production assets of 12.4 years is the average useful life of capital assets used in Schlumberger 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 SLB is equal to 4.8%. 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 - $36842 million for Schlumberger - 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 1384 million for Schlumberger 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 Schlumberger at the current share price and the inputted number of shares is $57.4 billion.

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