Intrinsic value of Walgreens Boots Alliance - WBA

Previous Close

$72.89

  Intrinsic Value

$124.49

stock screener

  Rating & Target

str. buy

+71%

Previous close

$72.89

 
Intrinsic value

$124.49

 
Up/down potential

+71%

 
Rating

str. buy

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 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 72.3

 

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, %
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
Revenue, $m
  134,764
  152,418
  171,150
  190,937
  211,758
  233,600
  256,453
  280,315
  305,191
  331,092
  358,036
  386,050
  415,166
  445,421
  476,863
  509,543
  543,518
  578,852
  615,614
  653,879
  693,727
  735,245
  778,524
  823,660
  870,756
  919,920
  971,265
  1,024,912
  1,080,985
  1,139,617
Variable operating expenses, $m
  127,530
  143,899
  161,267
  179,613
  198,918
  219,169
  240,358
  262,483
  285,547
  309,562
  331,966
  357,940
  384,935
  412,988
  442,141
  472,441
  503,942
  536,703
  570,788
  606,267
  643,214
  681,709
  721,836
  763,686
  807,352
  852,936
  900,543
  950,283
  1,002,273
  1,056,636
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
  127,530
  143,899
  161,267
  179,613
  198,918
  219,169
  240,358
  262,483
  285,547
  309,562
  331,966
  357,940
  384,935
  412,988
  442,141
  472,441
  503,942
  536,703
  570,788
  606,267
  643,214
  681,709
  721,836
  763,686
  807,352
  852,936
  900,543
  950,283
  1,002,273
  1,056,636
Operating income, $m
  7,234
  8,519
  9,883
  11,324
  12,840
  14,431
  16,095
  17,832
  19,644
  21,530
  26,070
  28,110
  30,230
  32,433
  34,723
  37,102
  39,576
  42,149
  44,826
  47,612
  50,514
  53,537
  56,688
  59,975
  63,404
  66,984
  70,722
  74,629
  78,712
  82,981
EBITDA, $m
  11,082
  12,534
  14,074
  15,701
  17,414
  19,210
  21,089
  23,051
  25,097
  27,227
  29,443
  31,746
  34,141
  36,629
  39,214
  41,902
  44,696
  47,601
  50,624
  53,771
  57,048
  60,462
  64,021
  67,733
  71,606
  75,648
  79,871
  84,282
  88,893
  93,715
Interest expense (income), $m
  0
  698
  990
  1,301
  1,631
  1,979
  2,346
  2,730
  3,133
  3,553
  3,991
  4,447
  4,921
  5,415
  5,927
  6,460
  7,014
  7,589
  8,187
  8,810
  9,457
  10,131
  10,832
  11,563
  12,325
  13,120
  13,949
  14,815
  15,719
  16,664
  17,651
Earnings before tax, $m
  6,536
  7,529
  8,582
  9,693
  10,861
  12,085
  13,364
  14,699
  16,091
  17,539
  21,623
  23,189
  24,815
  26,506
  28,262
  30,088
  31,987
  33,961
  36,016
  38,155
  40,383
  42,704
  45,125
  47,649
  50,284
  53,034
  55,907
  58,909
  62,048
  65,330
Tax expense, $m
  1,765
  2,033
  2,317
  2,617
  2,933
  3,263
  3,608
  3,969
  4,344
  4,735
  5,838
  6,261
  6,700
  7,157
  7,631
  8,124
  8,636
  9,170
  9,724
  10,302
  10,903
  11,530
  12,184
  12,865
  13,577
  14,319
  15,095
  15,906
  16,753
  17,639
Net income, $m
  4,771
  5,496
  6,265
  7,076
  7,929
  8,822
  9,756
  10,731
  11,746
  12,803
  15,785
  16,928
  18,115
  19,349
  20,632
  21,965
  23,350
  24,792
  26,292
  27,853
  29,479
  31,174
  32,941
  34,784
  36,707
  38,715
  40,812
  43,004
  45,295
  47,691

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
  75,245
  85,102
  95,561
  106,609
  118,235
  130,430
  143,190
  156,513
  170,402
  184,864
  199,909
  215,550
  231,807
  248,700
  266,255
  284,502
  303,472
  323,200
  343,726
  365,091
  387,341
  410,522
  434,687
  459,888
  486,184
  513,635
  542,303
  572,257
  603,565
  636,302
Adjusted assets (=assets-cash), $m
  75,245
  85,102
  95,561
  106,609
  118,235
  130,430
  143,190
  156,513
  170,402
  184,864
  199,909
  215,550
  231,807
  248,700
  266,255
  284,502
  303,472
  323,200
  343,726
  365,091
  387,341
  410,522
  434,687
  459,888
  486,184
  513,635
  542,303
  572,257
  603,565
  636,302
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
  30,591
  34,599
  38,851
  43,343
  48,069
  53,027
  58,215
  63,632
  69,278
  75,158
  81,274
  87,633
  94,243
  101,111
  108,248
  115,666
  123,379
  131,399
  139,744
  148,430
  157,476
  166,901
  176,725
  186,971
  197,662
  208,822
  220,477
  232,655
  245,384
  258,693
Working capital, $m
  -2,156
  -2,439
  -2,738
  -3,055
  -3,388
  -3,738
  -4,103
  -4,485
  -4,883
  -5,297
  -5,729
  -6,177
  -6,643
  -7,127
  -7,630
  -8,153
  -8,696
  -9,262
  -9,850
  -10,462
  -11,100
  -11,764
  -12,456
  -13,179
  -13,932
  -14,719
  -15,540
  -16,399
  -17,296
  -18,234
Total debt, $m
  18,335
  24,092
  30,200
  36,652
  43,441
  50,563
  58,015
  65,796
  73,907
  82,353
  91,139
  100,273
  109,767
  119,633
  129,885
  140,541
  151,619
  163,141
  175,128
  187,605
  200,599
  214,137
  228,249
  242,967
  258,324
  274,355
  291,097
  308,590
  326,874
  345,992
Total liabilities, $m
  43,943
  49,700
  55,808
  62,260
  69,049
  76,171
  83,623
  91,404
  99,515
  107,961
  116,747
  125,881
  135,375
  145,241
  155,493
  166,149
  177,227
  188,749
  200,736
  213,213
  226,207
  239,745
  253,857
  268,575
  283,932
  299,963
  316,705
  334,198
  352,482
  371,600
Total equity, $m
  31,302
  35,403
  39,753
  44,349
  49,186
  54,259
  59,567
  65,109
  70,887
  76,904
  83,162
  89,669
  96,432
  103,459
  110,762
  118,353
  126,244
  134,451
  142,990
  151,878
  161,134
  170,777
  180,830
  191,314
  202,253
  213,672
  225,598
  238,059
  251,083
  264,702
Total liabilities and equity, $m
  75,245
  85,103
  95,561
  106,609
  118,235
  130,430
  143,190
  156,513
  170,402
  184,865
  199,909
  215,550
  231,807
  248,700
  266,255
  284,502
  303,471
  323,200
  343,726
  365,091
  387,341
  410,522
  434,687
  459,889
  486,185
  513,635
  542,303
  572,257
  603,565
  636,302
Debt-to-equity ratio
  0.590
  0.680
  0.760
  0.830
  0.880
  0.930
  0.970
  1.010
  1.040
  1.070
  1.100
  1.120
  1.140
  1.160
  1.170
  1.190
  1.200
  1.210
  1.220
  1.240
  1.240
  1.250
  1.260
  1.270
  1.280
  1.280
  1.290
  1.300
  1.300
  1.310
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
  4,771
  5,496
  6,265
  7,076
  7,929
  8,822
  9,756
  10,731
  11,746
  12,803
  15,785
  16,928
  18,115
  19,349
  20,632
  21,965
  23,350
  24,792
  26,292
  27,853
  29,479
  31,174
  32,941
  34,784
  36,707
  38,715
  40,812
  43,004
  45,295
  47,691
Depreciation, amort., depletion, $m
  3,848
  4,014
  4,191
  4,377
  4,573
  4,779
  4,994
  5,219
  5,453
  5,697
  3,372
  3,636
  3,910
  4,195
  4,492
  4,799
  5,119
  5,452
  5,799
  6,159
  6,534
  6,925
  7,333
  7,758
  8,202
  8,665
  9,148
  9,654
  10,182
  10,734
Funds from operations, $m
  8,619
  9,511
  10,456
  11,453
  12,502
  13,601
  14,750
  15,950
  17,200
  18,501
  19,157
  20,564
  22,026
  23,545
  25,123
  26,764
  28,470
  30,244
  32,090
  34,012
  36,014
  38,099
  40,274
  42,542
  44,909
  47,380
  49,961
  52,658
  55,477
  58,425
Change in working capital, $m
  -265
  -282
  -300
  -317
  -333
  -349
  -366
  -382
  -398
  -414
  -431
  -448
  -466
  -484
  -503
  -523
  -544
  -565
  -588
  -612
  -638
  -664
  -692
  -722
  -754
  -787
  -822
  -858
  -897
  -938
Cash from operations, $m
  8,884
  9,793
  10,756
  11,770
  12,835
  13,951
  15,116
  16,332
  17,598
  18,915
  19,588
  21,012
  22,492
  24,029
  25,626
  27,287
  29,013
  30,809
  32,678
  34,624
  36,651
  38,764
  40,966
  43,264
  45,662
  48,166
  50,782
  53,516
  56,374
  59,363
Maintenance CAPEX, $m
  -1,116
  -1,269
  -1,436
  -1,612
  -1,798
  -1,995
  -2,200
  -2,416
  -2,640
  -2,875
  -3,119
  -3,372
  -3,636
  -3,910
  -4,195
  -4,492
  -4,799
  -5,119
  -5,452
  -5,799
  -6,159
  -6,534
  -6,925
  -7,333
  -7,758
  -8,202
  -8,665
  -9,148
  -9,654
  -10,182
New CAPEX, $m
  -3,699
  -4,007
  -4,252
  -4,492
  -4,726
  -4,958
  -5,188
  -5,417
  -5,647
  -5,880
  -6,116
  -6,359
  -6,609
  -6,868
  -7,137
  -7,418
  -7,712
  -8,021
  -8,345
  -8,686
  -9,046
  -9,425
  -9,824
  -10,246
  -10,691
  -11,160
  -11,655
  -12,178
  -12,729
  -13,309
Cash from investing activities, $m
  -4,815
  -5,276
  -5,688
  -6,104
  -6,524
  -6,953
  -7,388
  -7,833
  -8,287
  -8,755
  -9,235
  -9,731
  -10,245
  -10,778
  -11,332
  -11,910
  -12,511
  -13,140
  -13,797
  -14,485
  -15,205
  -15,959
  -16,749
  -17,579
  -18,449
  -19,362
  -20,320
  -21,326
  -22,383
  -23,491
Free cash flow, $m
  4,069
  4,517
  5,068
  5,666
  6,310
  6,998
  7,728
  8,499
  9,310
  10,161
  10,353
  11,281
  12,246
  13,250
  14,294
  15,377
  16,502
  17,669
  18,881
  20,140
  21,447
  22,805
  24,217
  25,685
  27,213
  28,804
  30,462
  32,190
  33,992
  35,872
Issuance/(repayment) of debt, $m
  5,400
  5,757
  6,108
  6,452
  6,789
  7,122
  7,452
  7,781
  8,111
  8,446
  8,786
  9,135
  9,494
  9,866
  10,252
  10,656
  11,078
  11,521
  11,987
  12,477
  12,994
  13,538
  14,112
  14,718
  15,357
  16,031
  16,742
  17,493
  18,284
  19,118
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  
  5,400
  5,757
  6,108
  6,452
  6,789
  7,122
  7,452
  7,781
  8,111
  8,446
  8,786
  9,135
  9,494
  9,866
  10,252
  10,656
  11,078
  11,521
  11,987
  12,477
  12,994
  13,538
  14,112
  14,718
  15,357
  16,031
  16,742
  17,493
  18,284
  19,118
Total cash flow (excl. dividends), $m
  9,469
  10,273
  11,176
  12,118
  13,100
  14,120
  15,180
  16,280
  17,422
  18,606
  19,139
  20,415
  21,740
  23,116
  24,546
  26,033
  27,580
  29,191
  30,868
  32,617
  34,440
  36,343
  38,329
  40,403
  42,570
  44,836
  47,204
  49,682
  52,276
  54,990
Retained Cash Flow (-), $m
  -3,836
  -4,101
  -4,351
  -4,596
  -4,836
  -5,073
  -5,308
  -5,543
  -5,778
  -6,016
  -6,258
  -6,507
  -6,763
  -7,028
  -7,303
  -7,591
  -7,891
  -8,207
  -8,539
  -8,888
  -9,256
  -9,643
  -10,052
  -10,484
  -10,939
  -11,419
  -11,926
  -12,461
  -13,024
  -13,619
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
  5,633
  6,173
  6,825
  7,522
  8,263
  9,047
  9,872
  10,738
  11,644
  12,590
  12,881
  13,908
  14,977
  16,088
  17,243
  18,442
  19,689
  20,984
  22,330
  23,729
  25,185
  26,699
  28,276
  29,919
  31,631
  33,416
  35,278
  37,222
  39,251
  41,371
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
  5,401
  5,651
  5,940
  6,194
  6,405
  6,566
  6,669
  6,711
  6,689
  6,601
  6,117
  5,935
  5,695
  5,401
  5,062
  4,687
  4,284
  3,864
  3,438
  3,015
  2,605
  2,215
  1,853
  1,524
  1,230
  975
  757
  576
  428
  312
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 0001 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 14% 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%.

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 22.7%.

Life of production assets of 24.1 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 -1.6%. 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 991.666 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 $72.3 billion.

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