Intrinsic value of Walgreens Boots Alliance - WBA

Previous Close

$64.98

  Intrinsic Value

$69.31

stock screener

  Rating & Target

hold

+7%

Previous close

$64.98

 
Intrinsic value

$69.31

 
Up/down potential

+7%

 
Rating

hold

We calculate the intrinsic value of WBA 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 69.8

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  120,578
  123,352
  126,522
  130,081
  134,024
  138,351
  143,063
  148,164
  153,658
  159,555
  165,864
  172,596
  179,763
  187,381
  195,464
  204,030
  213,097
  222,686
  232,817
  243,514
  254,802
  266,706
  279,253
  292,473
  306,397
  321,057
  336,487
  352,725
  369,807
  387,775
Variable operating expenses, $m
  114,377
  116,949
  119,888
  123,188
  126,844
  130,856
  135,225
  139,954
  145,049
  150,516
  153,787
  160,028
  166,674
  173,737
  181,231
  189,173
  197,580
  206,471
  215,865
  225,783
  236,249
  247,286
  258,919
  271,177
  284,087
  297,679
  311,986
  327,041
  342,880
  359,539
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
  114,377
  116,949
  119,888
  123,188
  126,844
  130,856
  135,225
  139,954
  145,049
  150,516
  153,787
  160,028
  166,674
  173,737
  181,231
  189,173
  197,580
  206,471
  215,865
  225,783
  236,249
  247,286
  258,919
  271,177
  284,087
  297,679
  311,986
  327,041
  342,880
  359,539
Operating income, $m
  6,201
  6,403
  6,634
  6,893
  7,180
  7,495
  7,838
  8,210
  8,610
  9,039
  12,077
  12,568
  13,089
  13,644
  14,233
  14,856
  15,517
  16,215
  16,952
  17,731
  18,553
  19,420
  20,334
  21,296
  22,310
  23,378
  24,501
  25,684
  26,927
  28,236
EBITDA, $m
  12,843
  13,139
  13,476
  13,856
  14,276
  14,736
  15,238
  15,782
  16,367
  16,995
  17,667
  18,384
  19,147
  19,959
  20,820
  21,732
  22,698
  23,719
  24,798
  25,938
  27,140
  28,408
  29,745
  31,153
  32,636
  34,197
  35,841
  37,570
  39,390
  41,304
Interest expense (income), $m
  0
  698
  740
  789
  845
  908
  977
  1,053
  1,136
  1,226
  1,323
  1,427
  1,538
  1,656
  1,782
  1,917
  2,059
  2,210
  2,369
  2,538
  2,717
  2,905
  3,104
  3,313
  3,534
  3,767
  4,012
  4,270
  4,542
  4,828
  5,129
Earnings before tax, $m
  5,503
  5,663
  5,845
  6,048
  6,273
  6,518
  6,785
  7,073
  7,384
  7,716
  10,651
  11,030
  11,433
  11,862
  12,316
  12,797
  13,307
  13,845
  14,414
  15,015
  15,648
  16,316
  17,020
  17,762
  18,543
  19,365
  20,231
  21,141
  22,099
  23,107
Tax expense, $m
  1,486
  1,529
  1,578
  1,633
  1,694
  1,760
  1,832
  1,910
  1,994
  2,083
  2,876
  2,978
  3,087
  3,203
  3,325
  3,455
  3,593
  3,738
  3,892
  4,054
  4,225
  4,405
  4,596
  4,796
  5,007
  5,229
  5,462
  5,708
  5,967
  6,239
Net income, $m
  4,017
  4,134
  4,267
  4,415
  4,579
  4,758
  4,953
  5,164
  5,390
  5,633
  7,775
  8,052
  8,346
  8,659
  8,991
  9,342
  9,714
  10,107
  10,522
  10,961
  11,423
  11,911
  12,425
  12,966
  13,536
  14,137
  14,769
  15,433
  16,133
  16,868

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
  67,325
  68,873
  70,643
  72,630
  74,832
  77,248
  79,879
  82,727
  85,795
  89,087
  92,610
  96,368
  100,370
  104,623
  109,137
  113,919
  118,982
  124,336
  129,993
  135,966
  142,268
  148,914
  155,920
  163,302
  171,076
  179,261
  187,877
  196,943
  206,481
  216,513
Adjusted assets (=assets-cash), $m
  67,325
  68,873
  70,643
  72,630
  74,832
  77,248
  79,879
  82,727
  85,795
  89,087
  92,610
  96,368
  100,370
  104,623
  109,137
  113,919
  118,982
  124,336
  129,993
  135,966
  142,268
  148,914
  155,920
  163,302
  171,076
  179,261
  187,877
  196,943
  206,481
  216,513
Revenue / Adjusted assets
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
  1.791
Average production assets, $m
  40,635
  41,569
  42,638
  43,837
  45,166
  46,624
  48,212
  49,931
  51,783
  53,770
  55,896
  58,165
  60,580
  63,147
  65,871
  68,758
  71,814
  75,045
  78,459
  82,064
  85,868
  89,880
  94,108
  98,563
  103,256
  108,196
  113,396
  118,868
  124,625
  130,680
Working capital, $m
  -3,617
  -3,701
  -3,796
  -3,902
  -4,021
  -4,151
  -4,292
  -4,445
  -4,610
  -4,787
  -4,976
  -5,178
  -5,393
  -5,621
  -5,864
  -6,121
  -6,393
  -6,681
  -6,985
  -7,305
  -7,644
  -8,001
  -8,378
  -8,774
  -9,192
  -9,632
  -10,095
  -10,582
  -11,094
  -11,633
Total debt, $m
  13,710
  14,614
  15,648
  16,808
  18,094
  19,505
  21,041
  22,704
  24,496
  26,419
  28,476
  30,671
  33,008
  35,492
  38,128
  40,921
  43,878
  47,004
  50,308
  53,796
  57,477
  61,358
  65,449
  69,760
  74,300
  79,081
  84,112
  89,407
  94,977
  100,836
Total liabilities, $m
  39,318
  40,222
  41,256
  42,416
  43,702
  45,113
  46,649
  48,312
  50,104
  52,027
  54,084
  56,279
  58,616
  61,100
  63,736
  66,529
  69,486
  72,612
  75,916
  79,404
  83,085
  86,966
  91,057
  95,368
  99,908
  104,689
  109,720
  115,015
  120,585
  126,444
Total equity, $m
  28,007
  28,651
  29,388
  30,214
  31,130
  32,135
  33,230
  34,414
  35,691
  37,060
  38,526
  40,089
  41,754
  43,523
  45,401
  47,390
  49,497
  51,724
  54,077
  56,562
  59,183
  61,948
  64,863
  67,933
  71,168
  74,573
  78,157
  81,928
  85,896
  90,069
Total liabilities and equity, $m
  67,325
  68,873
  70,644
  72,630
  74,832
  77,248
  79,879
  82,726
  85,795
  89,087
  92,610
  96,368
  100,370
  104,623
  109,137
  113,919
  118,983
  124,336
  129,993
  135,966
  142,268
  148,914
  155,920
  163,301
  171,076
  179,262
  187,877
  196,943
  206,481
  216,513
Debt-to-equity ratio
  0.490
  0.510
  0.530
  0.560
  0.580
  0.610
  0.630
  0.660
  0.690
  0.710
  0.740
  0.770
  0.790
  0.820
  0.840
  0.860
  0.890
  0.910
  0.930
  0.950
  0.970
  0.990
  1.010
  1.030
  1.040
  1.060
  1.080
  1.090
  1.110
  1.120
Adjusted equity ratio
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416
  0.416

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,017
  4,134
  4,267
  4,415
  4,579
  4,758
  4,953
  5,164
  5,390
  5,633
  7,775
  8,052
  8,346
  8,659
  8,991
  9,342
  9,714
  10,107
  10,522
  10,961
  11,423
  11,911
  12,425
  12,966
  13,536
  14,137
  14,769
  15,433
  16,133
  16,868
Depreciation, amort., depletion, $m
  6,642
  6,736
  6,843
  6,963
  7,095
  7,241
  7,400
  7,572
  7,757
  7,956
  5,590
  5,816
  6,058
  6,315
  6,587
  6,876
  7,181
  7,505
  7,846
  8,206
  8,587
  8,988
  9,411
  9,856
  10,326
  10,820
  11,340
  11,887
  12,463
  13,068
Funds from operations, $m
  10,659
  10,870
  11,109
  11,378
  11,674
  11,999
  12,353
  12,736
  13,147
  13,589
  13,365
  13,868
  14,404
  14,974
  15,578
  16,218
  16,895
  17,612
  18,368
  19,167
  20,010
  20,899
  21,836
  22,823
  23,862
  24,956
  26,108
  27,320
  28,595
  29,936
Change in working capital, $m
  -71
  -83
  -95
  -107
  -118
  -130
  -141
  -153
  -165
  -177
  -189
  -202
  -215
  -229
  -242
  -257
  -272
  -288
  -304
  -321
  -339
  -357
  -376
  -397
  -418
  -440
  -463
  -487
  -512
  -539
Cash from operations, $m
  10,730
  10,953
  11,204
  11,484
  11,793
  12,129
  12,494
  12,889
  13,312
  13,766
  13,554
  14,070
  14,619
  15,202
  15,820
  16,475
  17,167
  17,899
  18,672
  19,488
  20,349
  21,256
  22,212
  23,219
  24,280
  25,396
  26,571
  27,807
  29,108
  30,475
Maintenance CAPEX, $m
  -3,980
  -4,063
  -4,157
  -4,264
  -4,384
  -4,517
  -4,662
  -4,821
  -4,993
  -5,178
  -5,377
  -5,590
  -5,816
  -6,058
  -6,315
  -6,587
  -6,876
  -7,181
  -7,505
  -7,846
  -8,206
  -8,587
  -8,988
  -9,411
  -9,856
  -10,326
  -10,820
  -11,340
  -11,887
  -12,463
New CAPEX, $m
  -838
  -935
  -1,068
  -1,199
  -1,329
  -1,458
  -1,588
  -1,719
  -1,852
  -1,987
  -2,126
  -2,269
  -2,415
  -2,567
  -2,724
  -2,887
  -3,056
  -3,231
  -3,414
  -3,605
  -3,804
  -4,012
  -4,228
  -4,455
  -4,692
  -4,940
  -5,200
  -5,472
  -5,757
  -6,055
Cash from investing activities, $m
  -4,818
  -4,998
  -5,225
  -5,463
  -5,713
  -5,975
  -6,250
  -6,540
  -6,845
  -7,165
  -7,503
  -7,859
  -8,231
  -8,625
  -9,039
  -9,474
  -9,932
  -10,412
  -10,919
  -11,451
  -12,010
  -12,599
  -13,216
  -13,866
  -14,548
  -15,266
  -16,020
  -16,812
  -17,644
  -18,518
Free cash flow, $m
  5,913
  5,955
  5,979
  6,021
  6,080
  6,154
  6,244
  6,348
  6,467
  6,600
  6,051
  6,212
  6,387
  6,577
  6,782
  7,001
  7,236
  7,487
  7,753
  8,037
  8,338
  8,658
  8,996
  9,353
  9,731
  10,130
  10,551
  10,996
  11,464
  11,957
Issuance/(repayment) of debt, $m
  775
  904
  1,034
  1,161
  1,286
  1,411
  1,536
  1,663
  1,792
  1,923
  2,057
  2,195
  2,337
  2,484
  2,636
  2,793
  2,957
  3,127
  3,304
  3,488
  3,681
  3,881
  4,091
  4,311
  4,540
  4,780
  5,032
  5,295
  5,570
  5,859
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  
  775
  904
  1,034
  1,161
  1,286
  1,411
  1,536
  1,663
  1,792
  1,923
  2,057
  2,195
  2,337
  2,484
  2,636
  2,793
  2,957
  3,127
  3,304
  3,488
  3,681
  3,881
  4,091
  4,311
  4,540
  4,780
  5,032
  5,295
  5,570
  5,859
Total cash flow (excl. dividends), $m
  6,687
  6,859
  7,013
  7,182
  7,366
  7,565
  7,781
  8,012
  8,259
  8,523
  8,108
  8,407
  8,724
  9,061
  9,417
  9,794
  10,193
  10,613
  11,057
  11,525
  12,019
  12,539
  13,087
  13,664
  14,271
  14,910
  15,583
  16,290
  17,034
  17,816
Retained Cash Flow (-), $m
  -541
  -644
  -736
  -827
  -916
  -1,005
  -1,094
  -1,185
  -1,276
  -1,370
  -1,465
  -1,564
  -1,665
  -1,769
  -1,877
  -1,990
  -2,106
  -2,227
  -2,353
  -2,485
  -2,622
  -2,765
  -2,914
  -3,071
  -3,234
  -3,405
  -3,584
  -3,771
  -3,968
  -4,173
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
  118
  121
  123
  127
  130
  134
  138
  143
  148
  154
  160
  166
  173
  180
  187
  195
  204
  213
  223
  233
  244
  255
  267
  279
  292
  306
  321
  336
  353
  370
Cash available for distribution, $m
  6,146
  6,215
  6,276
  6,355
  6,450
  6,560
  6,686
  6,827
  6,983
  7,153
  6,643
  6,843
  7,060
  7,292
  7,540
  7,805
  8,086
  8,386
  8,704
  9,041
  9,397
  9,774
  10,173
  10,593
  11,037
  11,505
  11,999
  12,519
  13,066
  13,643
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
  5,893
  5,689
  5,462
  5,233
  4,999
  4,761
  4,517
  4,267
  4,011
  3,750
  3,154
  2,920
  2,684
  2,448
  2,214
  1,983
  1,759
  1,544
  1,340
  1,149
  972
  811
  667
  540
  429
  336
  258
  194
  143
  103
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

Walgreens Boots Alliance, Inc. is a holding company. The Company is a pharmacy-led health and wellbeing company. The Company operates through three segments: Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale. The Retail Pharmacy USA segment consists of the Walgreen Co. (Walgreens) business, which includes the operation of retail drugstores, care clinics and providing specialty pharmacy services. The Retail Pharmacy International segment consists primarily of the Alliance Boots pharmacy-led health and beauty stores, optical practices and related contract manufacturing operations. The Pharmaceutical Wholesale segment consists of the Alliance Boots pharmaceutical wholesaling and distribution businesses. The Company's portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as global health and beauty product brands, including No7, Botanics, Liz Earle and Soap & Glory. _tck('aft');

FINANCIAL RATIOS  of  Walgreens Boots Alliance (WBA)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

WBA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WBA stock intrinsic value calculation we used $118214 million for the last fiscal year's total revenue generated by Walgreens Boots Alliance. The default revenue input number comes from 2017 income statement of Walgreens Boots Alliance. 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 WBA stock valuation model: a) initial revenue growth rate of 2% 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 WBA is calculated based on our internal credit rating of Walgreens Boots Alliance, 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 Walgreens Boots Alliance.
    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 WBA stock the variable cost ratio is equal to 94.9%.

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 WBA 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 Walgreens Boots Alliance.

Corporate tax rate of 27% is the nominal tax rate for Walgreens Boots Alliance. 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 WBA stock is equal to 0.1%.

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 WBA are equal to 33.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Walgreens Boots Alliance 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 WBA is equal to -3%. 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 - $27466 million for Walgreens Boots Alliance - 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 1074 million for Walgreens Boots Alliance 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 Walgreens Boots Alliance at the current share price and the inputted number of shares is $69.8 billion.

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