Intrinsic value of Willis Towers Watson Public Limited Comp - WLTW

Previous Close

$194.55

  Intrinsic Value

$706.71

stock screener

  Rating & Target

str. buy

+263%

Previous close

$194.55

 
Intrinsic value

$706.71

 
Up/down potential

+263%

 
Rating

str. buy

We calculate the intrinsic value of WLTW 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 25.1

 

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, %
  14.10
  13.19
  12.37
  11.63
  10.97
  10.37
  9.84
  9.35
  8.92
  8.53
  8.17
  7.86
  7.57
  7.31
  7.08
  6.87
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
  5.65
  5.59
  5.53
  5.48
  5.43
Revenue, $m
  9,713
  10,995
  12,355
  13,792
  15,305
  16,893
  18,554
  20,290
  22,099
  23,983
  25,943
  27,981
  30,099
  32,300
  34,588
  36,965
  39,437
  42,007
  44,681
  47,465
  50,363
  53,383
  56,530
  59,813
  63,237
  66,812
  70,546
  74,446
  78,523
  82,786
Variable operating expenses, $m
  1,622
  1,654
  1,688
  1,724
  1,762
  1,802
  1,844
  1,887
  1,933
  1,980
  651
  702
  755
  811
  868
  928
  990
  1,054
  1,121
  1,191
  1,264
  1,340
  1,419
  1,501
  1,587
  1,677
  1,770
  1,868
  1,971
  2,077
Fixed operating expenses, $m
  6,422
  6,564
  6,708
  6,856
  7,006
  7,160
  7,318
  7,479
  7,644
  7,812
  7,984
  8,159
  8,339
  8,522
  8,710
  8,901
  9,097
  9,297
  9,502
  9,711
  9,924
  10,143
  10,366
  10,594
  10,827
  11,065
  11,309
  11,557
  11,812
  12,072
Total operating expenses, $m
  8,044
  8,218
  8,396
  8,580
  8,768
  8,962
  9,162
  9,366
  9,577
  9,792
  8,635
  8,861
  9,094
  9,333
  9,578
  9,829
  10,087
  10,351
  10,623
  10,902
  11,188
  11,483
  11,785
  12,095
  12,414
  12,742
  13,079
  13,425
  13,783
  14,149
Operating income, $m
  1,669
  2,777
  3,958
  5,212
  6,536
  7,930
  9,392
  10,923
  12,522
  14,191
  17,308
  19,120
  21,005
  22,968
  25,010
  27,136
  29,350
  31,656
  34,058
  36,563
  39,175
  41,900
  44,746
  47,718
  50,823
  54,070
  57,467
  61,021
  64,741
  68,637
EBITDA, $m
  3,500
  4,667
  5,912
  7,233
  8,628
  10,095
  11,635
  13,247
  14,930
  16,687
  18,517
  20,423
  22,407
  24,472
  26,621
  28,858
  31,187
  33,613
  36,140
  38,774
  41,521
  44,387
  47,379
  50,504
  53,769
  57,183
  60,753
  64,489
  68,399
  72,493
Interest expense (income), $m
  143
  247
  418
  601
  796
  1,001
  1,217
  1,444
  1,682
  1,930
  2,188
  2,458
  2,738
  3,029
  3,332
  3,646
  3,973
  4,313
  4,666
  5,033
  5,415
  5,813
  6,227
  6,659
  7,109
  7,578
  8,067
  8,578
  9,112
  9,669
  10,252
Earnings before tax, $m
  1,422
  2,358
  3,357
  4,416
  5,535
  6,713
  7,948
  9,241
  10,593
  12,003
  14,851
  16,382
  17,976
  19,636
  21,364
  23,163
  25,037
  26,990
  29,025
  31,147
  33,362
  35,673
  38,087
  40,609
  43,246
  46,003
  48,889
  51,909
  55,072
  58,385
Tax expense, $m
  384
  637
  906
  1,192
  1,494
  1,812
  2,146
  2,495
  2,860
  3,241
  4,010
  4,423
  4,854
  5,302
  5,768
  6,254
  6,760
  7,287
  7,837
  8,410
  9,008
  9,632
  10,283
  10,964
  11,676
  12,421
  13,200
  14,015
  14,869
  15,764
Net income, $m
  1,038
  1,722
  2,451
  3,224
  4,041
  4,900
  5,802
  6,746
  7,733
  8,762
  10,841
  11,959
  13,123
  14,334
  15,596
  16,909
  18,277
  19,703
  21,188
  22,738
  24,354
  26,041
  27,803
  29,645
  31,569
  33,582
  35,689
  37,894
  40,203
  42,621

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
  36,933
  41,804
  46,976
  52,441
  58,194
  64,231
  70,549
  77,147
  84,026
  91,190
  98,643
  106,392
  114,446
  122,815
  131,513
  140,552
  149,950
  159,723
  169,891
  180,474
  191,494
  202,976
  214,943
  227,424
  240,446
  254,039
  268,235
  283,066
  298,567
  314,775
Adjusted assets (=assets-cash), $m
  36,933
  41,804
  46,976
  52,441
  58,194
  64,231
  70,549
  77,147
  84,026
  91,190
  98,643
  106,392
  114,446
  122,815
  131,513
  140,552
  149,950
  159,723
  169,891
  180,474
  191,494
  202,976
  214,943
  227,424
  240,446
  254,039
  268,235
  283,066
  298,567
  314,775
Revenue / Adjusted assets
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
Average production assets, $m
  9,140
  10,346
  11,626
  12,978
  14,402
  15,896
  17,460
  19,092
  20,795
  22,568
  24,412
  26,330
  28,323
  30,395
  32,547
  34,784
  37,110
  39,529
  42,045
  44,664
  47,392
  50,233
  53,195
  56,284
  59,506
  62,870
  66,384
  70,054
  73,890
  77,902
Working capital, $m
  311
  352
  395
  441
  490
  541
  594
  649
  707
  767
  830
  895
  963
  1,034
  1,107
  1,183
  1,262
  1,344
  1,430
  1,519
  1,612
  1,708
  1,809
  1,914
  2,024
  2,138
  2,257
  2,382
  2,513
  2,649
Total debt, $m
  7,747
  11,138
  14,737
  18,541
  22,545
  26,747
  31,144
  35,736
  40,524
  45,510
  50,697
  56,091
  61,696
  67,521
  73,575
  79,866
  86,407
  93,209
  100,286
  107,652
  115,322
  123,313
  131,643
  140,329
  149,392
  158,853
  168,733
  179,056
  189,845
  201,126
Total liabilities, $m
  25,705
  29,096
  32,695
  36,499
  40,503
  44,705
  49,102
  53,694
  58,482
  63,468
  68,655
  74,049
  79,654
  85,479
  91,533
  97,824
  104,365
  111,167
  118,244
  125,610
  133,280
  141,271
  149,601
  158,287
  167,350
  176,811
  186,691
  197,014
  207,803
  219,084
Total equity, $m
  11,228
  12,708
  14,281
  15,942
  17,691
  19,526
  21,447
  23,453
  25,544
  27,722
  29,987
  32,343
  34,791
  37,336
  39,980
  42,728
  45,585
  48,556
  51,647
  54,864
  58,214
  61,705
  65,343
  69,137
  73,096
  77,228
  81,543
  86,052
  90,764
  95,692
Total liabilities and equity, $m
  36,933
  41,804
  46,976
  52,441
  58,194
  64,231
  70,549
  77,147
  84,026
  91,190
  98,642
  106,392
  114,445
  122,815
  131,513
  140,552
  149,950
  159,723
  169,891
  180,474
  191,494
  202,976
  214,944
  227,424
  240,446
  254,039
  268,234
  283,066
  298,567
  314,776
Debt-to-equity ratio
  0.690
  0.880
  1.030
  1.160
  1.270
  1.370
  1.450
  1.520
  1.590
  1.640
  1.690
  1.730
  1.770
  1.810
  1.840
  1.870
  1.900
  1.920
  1.940
  1.960
  1.980
  2.000
  2.010
  2.030
  2.040
  2.060
  2.070
  2.080
  2.090
  2.100
Adjusted equity ratio
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304
  0.304

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,038
  1,722
  2,451
  3,224
  4,041
  4,900
  5,802
  6,746
  7,733
  8,762
  10,841
  11,959
  13,123
  14,334
  15,596
  16,909
  18,277
  19,703
  21,188
  22,738
  24,354
  26,041
  27,803
  29,645
  31,569
  33,582
  35,689
  37,894
  40,203
  42,621
Depreciation, amort., depletion, $m
  1,831
  1,890
  1,954
  2,021
  2,091
  2,165
  2,243
  2,323
  2,408
  2,496
  1,209
  1,303
  1,402
  1,505
  1,611
  1,722
  1,837
  1,957
  2,081
  2,211
  2,346
  2,487
  2,633
  2,786
  2,946
  3,112
  3,286
  3,468
  3,658
  3,857
Funds from operations, $m
  2,869
  3,612
  4,404
  5,245
  6,132
  7,065
  8,045
  9,070
  10,140
  11,258
  12,050
  13,262
  14,525
  15,839
  17,207
  18,631
  20,114
  21,659
  23,270
  24,949
  26,700
  28,528
  30,437
  32,431
  34,515
  36,695
  38,975
  41,362
  43,860
  46,478
Change in working capital, $m
  38
  41
  44
  46
  48
  51
  53
  56
  58
  60
  63
  65
  68
  70
  73
  76
  79
  82
  86
  89
  93
  97
  101
  105
  110
  114
  119
  125
  130
  136
Cash from operations, $m
  2,830
  3,571
  4,361
  5,199
  6,083
  7,015
  7,992
  9,014
  10,083
  11,197
  11,987
  13,197
  14,457
  15,769
  17,134
  18,555
  20,035
  21,577
  23,184
  24,860
  26,607
  28,431
  30,336
  32,326
  34,406
  36,580
  38,856
  41,237
  43,730
  46,341
Maintenance CAPEX, $m
  -397
  -452
  -512
  -576
  -642
  -713
  -787
  -864
  -945
  -1,029
  -1,117
  -1,209
  -1,303
  -1,402
  -1,505
  -1,611
  -1,722
  -1,837
  -1,957
  -2,081
  -2,211
  -2,346
  -2,487
  -2,633
  -2,786
  -2,946
  -3,112
  -3,286
  -3,468
  -3,658
New CAPEX, $m
  -1,131
  -1,206
  -1,280
  -1,353
  -1,424
  -1,494
  -1,564
  -1,633
  -1,703
  -1,773
  -1,844
  -1,918
  -1,993
  -2,071
  -2,152
  -2,237
  -2,326
  -2,419
  -2,516
  -2,619
  -2,727
  -2,841
  -2,962
  -3,089
  -3,223
  -3,364
  -3,513
  -3,670
  -3,836
  -4,011
Cash from investing activities, $m
  -1,528
  -1,658
  -1,792
  -1,929
  -2,066
  -2,207
  -2,351
  -2,497
  -2,648
  -2,802
  -2,961
  -3,127
  -3,296
  -3,473
  -3,657
  -3,848
  -4,048
  -4,256
  -4,473
  -4,700
  -4,938
  -5,187
  -5,449
  -5,722
  -6,009
  -6,310
  -6,625
  -6,956
  -7,304
  -7,669
Free cash flow, $m
  1,303
  1,913
  2,569
  3,271
  4,017
  4,808
  5,641
  6,517
  7,435
  8,395
  9,025
  10,071
  11,160
  12,295
  13,477
  14,707
  15,988
  17,321
  18,711
  20,159
  21,669
  23,244
  24,887
  26,604
  28,397
  30,270
  32,230
  34,280
  36,426
  38,672
Issuance/(repayment) of debt, $m
  3,172
  3,391
  3,599
  3,804
  4,004
  4,202
  4,397
  4,592
  4,788
  4,986
  5,187
  5,393
  5,606
  5,825
  6,053
  6,292
  6,541
  6,802
  7,077
  7,366
  7,670
  7,991
  8,330
  8,687
  9,063
  9,461
  9,880
  10,322
  10,789
  11,281
Issuance/(repurchase) of shares, $m
  338
  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  
  3,510
  3,391
  3,599
  3,804
  4,004
  4,202
  4,397
  4,592
  4,788
  4,986
  5,187
  5,393
  5,606
  5,825
  6,053
  6,292
  6,541
  6,802
  7,077
  7,366
  7,670
  7,991
  8,330
  8,687
  9,063
  9,461
  9,880
  10,322
  10,789
  11,281
Total cash flow (excl. dividends), $m
  4,813
  5,304
  6,168
  7,074
  8,021
  9,009
  10,038
  11,109
  12,223
  13,381
  14,212
  15,464
  16,766
  18,120
  19,530
  20,998
  22,528
  24,123
  25,788
  27,525
  29,339
  31,235
  33,217
  35,290
  37,460
  39,731
  42,110
  44,603
  47,215
  49,953
Retained Cash Flow (-), $m
  -1,376
  -1,481
  -1,572
  -1,661
  -1,749
  -1,835
  -1,921
  -2,006
  -2,091
  -2,178
  -2,266
  -2,356
  -2,448
  -2,544
  -2,644
  -2,748
  -2,857
  -2,971
  -3,091
  -3,217
  -3,350
  -3,490
  -3,638
  -3,794
  -3,959
  -4,132
  -4,315
  -4,509
  -4,712
  -4,927
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
  3,437
  3,823
  4,596
  5,413
  6,272
  7,174
  8,118
  9,103
  10,132
  11,203
  11,947
  13,108
  14,318
  15,576
  16,886
  18,250
  19,671
  21,152
  22,697
  24,308
  25,989
  27,744
  29,579
  31,496
  33,501
  35,599
  37,795
  40,094
  42,502
  45,026
Discount rate, %
  5.00
  5.25
  5.51
  5.79
  6.08
  6.38
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
PV of cash for distribution, $m
  3,274
  3,451
  3,913
  4,322
  4,670
  4,950
  5,155
  5,284
  5,335
  5,308
  5,049
  4,897
  4,682
  4,412
  4,098
  3,751
  3,381
  3,001
  2,620
  2,251
  1,900
  1,575
  1,281
  1,021
  798
  610
  456
  333
  237
  164
Current shareholders' claim on cash, %
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7
  98.7

Willis Towers Watson Public Limited Company (Willis Towers Watson) is a holding company. The Company operates as a global advisory, broking and solutions company. It is engaged in offering risk management, insurance broking, consulting, technology and solutions, and private exchanges. The Company operates through eight segments: Willis International; Willis North America; Willis Capital, Wholesale & Reinsurance (CWR); Willis GB; Towers Watson Benefits; Towers Watson Exchange Solutions; Towers Watson Risk and Financial Services; and Towers Watson Talent and Rewards. The Willis GB segment comprises four business units: Property and Casualty, Transport, Financial Lines and Retail Networks. The Willis Capital Wholesale and Reinsurance segment includes Willis Re; Willis Capital Markets & Advisory; Willis' wholesale business, and Willis Portfolio Underwriting Services. The Willis North America segment provides risk management, insurance brokerage and related risk services.

FINANCIAL RATIOS  of  Willis Towers Watson Public Limited Comp (WLTW)

Valuation Ratios
P/E Ratio 63.1
Price to Sales 3.4
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 28.8
Price to Free Cash Flow 43
Growth Rates
Sales Growth Rate 106%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 91.8%
Cap. Spend. - 3 Yr. Gr. Rate 20.6%
Financial Strength
Quick Ratio 2
Current Ratio 0.8
LT Debt to Equity 33.4%
Total Debt to Equity 38.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 2.5%
Ret/ On Assets - 3 Yr. Avg. 2.8%
Return On Total Capital 4.3%
Ret/ On T. Cap. - 3 Yr. Avg. 6.7%
Return On Equity 6.8%
Return On Equity - 3 Yr. Avg. 13.9%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 15.9%
EBITDA Margin - 3 Yr. Avg. 17.7%
Operating Margin 7%
Oper. Margin - 3 Yr. Avg. 11.7%
Pre-Tax Margin 4.3%
Pre-Tax Margin - 3 Yr. Avg. 8.9%
Net Profit Margin 5.3%
Net Profit Margin - 3 Yr. Avg. 8.2%
Effective Tax Rate -28.2%
Eff/ Tax Rate - 3 Yr. Avg. -2.4%
Payout Ratio 47.4%

WLTW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WLTW stock intrinsic value calculation we used $8513 million for the last fiscal year's total revenue generated by Willis Towers Watson Public Limited Comp. The default revenue input number comes from 0001 income statement of Willis Towers Watson Public Limited Comp. 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 WLTW stock valuation model: a) initial revenue growth rate of 14.1% 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 5%, whose default value for WLTW is calculated based on our internal credit rating of Willis Towers Watson Public Limited Comp, 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 Willis Towers Watson Public Limited Comp.
    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 WLTW stock the variable cost ratio is equal to 18.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $6284 million in the base year in the intrinsic value calculation for WLTW 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 Willis Towers Watson Public Limited Comp.

Corporate tax rate of 27% is the nominal tax rate for Willis Towers Watson Public Limited Comp. 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 WLTW 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 WLTW are equal to 94.1%.

Life of production assets of 20.2 years is the average useful life of capital assets used in Willis Towers Watson Public Limited Comp 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 WLTW is equal to 3.2%. 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 - $9852 million for Willis Towers Watson Public Limited Comp - 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 129.110 million for Willis Towers Watson Public Limited Comp 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 Willis Towers Watson Public Limited Comp at the current share price and the inputted number of shares is $25.1 billion.

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