Intrinsic value of Exxon Mobil Corporation - XOM

Previous Close

$80.48

  Intrinsic Value

$70.34

stock screener

  Rating & Target

hold

-13%

Previous close

$80.48

 
Intrinsic value

$70.34

 
Up/down potential

-13%

 
Rating

hold

We calculate the intrinsic value of XOM 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 340.8

 

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, %
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.27
  5.25
  5.22
  5.20
  5.18
  5.16
  5.15
Revenue, $m
  313,719
  338,158
  363,557
  389,951
  417,380
  445,889
  475,529
  506,356
  538,431
  571,819
  606,591
  642,822
  680,591
  719,983
  761,088
  804,001
  848,819
  895,648
  944,598
  995,784
  1,049,326
  1,105,352
  1,163,994
  1,225,391
  1,289,691
  1,357,046
  1,427,616
  1,501,570
  1,579,085
  1,660,345
Variable operating expenses, $m
  228,701
  246,517
  265,033
  284,274
  304,270
  325,053
  346,661
  369,134
  392,516
  416,856
  442,205
  468,617
  496,151
  524,868
  554,833
  586,116
  618,789
  652,928
  688,612
  725,926
  764,959
  805,801
  848,551
  893,310
  940,185
  989,286
  1,040,732
  1,094,645
  1,151,153
  1,210,391
Fixed operating expenses, $m
  49,141
  50,222
  51,327
  52,456
  53,610
  54,789
  55,995
  57,227
  58,486
  59,772
  61,087
  62,431
  63,805
  65,208
  66,643
  68,109
  69,608
  71,139
  72,704
  74,304
  75,938
  77,609
  79,316
  81,061
  82,845
  84,667
  86,530
  88,433
  90,379
  92,367
Total operating expenses, $m
  277,842
  296,739
  316,360
  336,730
  357,880
  379,842
  402,656
  426,361
  451,002
  476,628
  503,292
  531,048
  559,956
  590,076
  621,476
  654,225
  688,397
  724,067
  761,316
  800,230
  840,897
  883,410
  927,867
  974,371
  1,023,030
  1,073,953
  1,127,262
  1,183,078
  1,241,532
  1,302,758
Operating income, $m
  35,877
  41,419
  47,197
  53,221
  59,500
  66,046
  72,874
  79,996
  87,429
  95,191
  103,299
  111,773
  120,635
  129,907
  139,612
  149,775
  160,422
  171,582
  183,282
  195,554
  208,429
  221,941
  236,126
  251,020
  266,662
  283,092
  300,354
  318,492
  337,553
  357,586
EBITDA, $m
  56,186
  63,310
  70,733
  78,465
  86,520
  94,912
  103,658
  112,776
  122,285
  132,208
  142,568
  153,388
  164,695
  176,516
  188,882
  201,823
  215,372
  229,563
  244,432
  260,018
  276,359
  293,498
  311,479
  330,348
  350,152
  370,943
  392,773
  415,699
  439,778
  465,072
Interest expense (income), $m
  818
  2,041
  2,720
  3,422
  4,152
  4,910
  5,699
  6,518
  7,370
  8,256
  9,178
  10,137
  11,137
  12,178
  13,263
  14,395
  15,577
  16,810
  18,098
  19,444
  20,851
  22,322
  23,861
  25,471
  27,156
  28,921
  30,769
  32,705
  34,733
  36,858
  39,086
Earnings before tax, $m
  33,836
  38,699
  43,775
  49,069
  54,589
  60,348
  66,356
  72,626
  79,173
  86,013
  93,162
  100,637
  108,457
  116,644
  125,216
  134,198
  143,612
  153,484
  163,838
  174,703
  186,107
  198,081
  210,655
  223,864
  237,741
  252,323
  267,650
  283,759
  300,695
  318,500
Tax expense, $m
  9,136
  10,449
  11,819
  13,249
  14,739
  16,294
  17,916
  19,609
  21,377
  23,223
  25,154
  27,172
  29,284
  31,494
  33,808
  36,233
  38,775
  41,441
  44,236
  47,170
  50,249
  53,482
  56,877
  60,443
  64,190
  68,127
  72,265
  76,615
  81,188
  85,995
Net income, $m
  24,700
  28,251
  31,956
  35,820
  39,850
  44,054
  48,440
  53,017
  57,796
  62,789
  68,008
  73,465
  79,174
  85,150
  91,408
  97,965
  104,837
  112,043
  119,602
  127,533
  135,858
  144,599
  153,778
  163,420
  173,551
  184,196
  195,384
  207,144
  219,507
  232,505

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
  374,367
  403,530
  433,839
  465,335
  498,066
  532,087
  567,457
  604,244
  642,519
  682,362
  723,856
  767,090
  812,161
  859,169
  908,220
  959,428
  1,012,911
  1,068,793
  1,127,206
  1,188,286
  1,252,179
  1,319,035
  1,389,014
  1,462,281
  1,539,011
  1,619,386
  1,703,599
  1,791,850
  1,884,350
  1,981,318
Adjusted assets (=assets-cash), $m
  374,367
  403,530
  433,839
  465,335
  498,066
  532,087
  567,457
  604,244
  642,519
  682,362
  723,856
  767,090
  812,161
  859,169
  908,220
  959,428
  1,012,911
  1,068,793
  1,127,206
  1,188,286
  1,252,179
  1,319,035
  1,389,014
  1,462,281
  1,539,011
  1,619,386
  1,703,599
  1,791,850
  1,884,350
  1,981,318
Revenue / Adjusted assets
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
Average production assets, $m
  270,112
  291,154
  313,023
  335,748
  359,364
  383,910
  409,431
  435,973
  463,589
  492,336
  522,275
  553,469
  585,989
  619,906
  655,297
  692,245
  730,833
  771,153
  813,299
  857,370
  903,470
  951,708
  1,002,198
  1,055,062
  1,110,424
  1,168,416
  1,229,177
  1,292,852
  1,359,592
  1,429,557
Working capital, $m
  5,333
  5,749
  6,180
  6,629
  7,095
  7,580
  8,084
  8,608
  9,153
  9,721
  10,312
  10,928
  11,570
  12,240
  12,939
  13,668
  14,430
  15,226
  16,058
  16,928
  17,839
  18,791
  19,788
  20,832
  21,925
  23,070
  24,269
  25,527
  26,844
  28,226
Total debt, $m
  50,361
  63,368
  76,886
  90,933
  105,532
  120,705
  136,480
  152,887
  169,958
  187,727
  206,234
  225,516
  245,618
  266,583
  288,460
  311,299
  335,152
  360,076
  386,128
  413,370
  441,866
  471,684
  502,894
  535,571
  569,793
  605,640
  643,199
  682,559
  723,814
  767,062
Total liabilities, $m
  166,967
  179,974
  193,492
  207,539
  222,138
  237,311
  253,086
  269,493
  286,564
  304,333
  322,840
  342,122
  362,224
  383,189
  405,066
  427,905
  451,758
  476,682
  502,734
  529,976
  558,472
  588,290
  619,500
  652,177
  686,399
  722,246
  759,805
  799,165
  840,420
  883,668
Total equity, $m
  207,399
  223,555
  240,347
  257,796
  275,929
  294,776
  314,371
  334,751
  355,956
  378,029
  401,016
  424,968
  449,937
  475,979
  503,154
  531,523
  561,152
  592,111
  624,472
  658,311
  693,707
  730,746
  769,514
  810,104
  852,612
  897,140
  943,794
  992,685
  1,043,930
  1,097,650
Total liabilities and equity, $m
  374,366
  403,529
  433,839
  465,335
  498,067
  532,087
  567,457
  604,244
  642,520
  682,362
  723,856
  767,090
  812,161
  859,168
  908,220
  959,428
  1,012,910
  1,068,793
  1,127,206
  1,188,287
  1,252,179
  1,319,036
  1,389,014
  1,462,281
  1,539,011
  1,619,386
  1,703,599
  1,791,850
  1,884,350
  1,981,318
Debt-to-equity ratio
  0.240
  0.280
  0.320
  0.350
  0.380
  0.410
  0.430
  0.460
  0.480
  0.500
  0.510
  0.530
  0.550
  0.560
  0.570
  0.590
  0.600
  0.610
  0.620
  0.630
  0.640
  0.650
  0.650
  0.660
  0.670
  0.680
  0.680
  0.690
  0.690
  0.700
Adjusted equity ratio
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  24,700
  28,251
  31,956
  35,820
  39,850
  44,054
  48,440
  53,017
  57,796
  62,789
  68,008
  73,465
  79,174
  85,150
  91,408
  97,965
  104,837
  112,043
  119,602
  127,533
  135,858
  144,599
  153,778
  163,420
  173,551
  184,196
  195,384
  207,144
  219,507
  232,505
Depreciation, amort., depletion, $m
  20,309
  21,891
  23,536
  25,244
  27,020
  28,865
  30,784
  32,780
  34,856
  37,018
  39,269
  41,614
  44,059
  46,609
  49,270
  52,048
  54,950
  57,981
  61,150
  64,464
  67,930
  71,557
  75,353
  79,328
  83,491
  87,851
  92,419
  97,207
  102,225
  107,485
Funds from operations, $m
  45,010
  50,142
  55,491
  61,064
  66,870
  72,919
  79,224
  85,797
  92,653
  99,807
  107,277
  115,079
  123,233
  131,759
  140,678
  150,013
  159,787
  170,024
  180,752
  191,997
  203,788
  216,156
  229,131
  242,748
  257,041
  272,047
  287,804
  304,351
  321,732
  339,991
Change in working capital, $m
  400
  415
  432
  449
  466
  485
  504
  524
  545
  568
  591
  616
  642
  670
  699
  730
  762
  796
  832
  870
  910
  952
  997
  1,044
  1,093
  1,145
  1,200
  1,257
  1,318
  1,381
Cash from operations, $m
  44,610
  49,726
  55,060
  60,616
  66,404
  72,435
  78,720
  85,273
  92,108
  99,240
  106,686
  114,463
  122,591
  131,090
  139,980
  149,284
  159,025
  169,228
  179,920
  191,127
  202,878
  215,203
  228,135
  241,705
  255,948
  270,902
  286,604
  303,094
  320,414
  338,609
Maintenance CAPEX, $m
  -18,787
  -20,309
  -21,891
  -23,536
  -25,244
  -27,020
  -28,865
  -30,784
  -32,780
  -34,856
  -37,018
  -39,269
  -41,614
  -44,059
  -46,609
  -49,270
  -52,048
  -54,950
  -57,981
  -61,150
  -64,464
  -67,930
  -71,557
  -75,353
  -79,328
  -83,491
  -87,851
  -92,419
  -97,207
  -102,225
New CAPEX, $m
  -20,247
  -21,042
  -21,869
  -22,725
  -23,616
  -24,546
  -25,520
  -26,542
  -27,616
  -28,747
  -29,939
  -31,195
  -32,519
  -33,917
  -35,392
  -36,947
  -38,589
  -40,320
  -42,146
  -44,071
  -46,100
  -48,238
  -50,491
  -52,863
  -55,362
  -57,992
  -60,761
  -63,675
  -66,740
  -69,965
Cash from investing activities, $m
  -39,034
  -41,351
  -43,760
  -46,261
  -48,860
  -51,566
  -54,385
  -57,326
  -60,396
  -63,603
  -66,957
  -70,464
  -74,133
  -77,976
  -82,001
  -86,217
  -90,637
  -95,270
  -100,127
  -105,221
  -110,564
  -116,168
  -122,048
  -128,216
  -134,690
  -141,483
  -148,612
  -156,094
  -163,947
  -172,190
Free cash flow, $m
  5,576
  8,375
  11,300
  14,355
  17,543
  20,868
  24,334
  27,946
  31,711
  35,636
  39,729
  44,000
  48,458
  53,113
  57,979
  63,066
  68,388
  73,958
  79,793
  85,906
  92,314
  99,035
  106,087
  113,488
  121,258
  129,419
  137,992
  147,000
  156,467
  166,419
Issuance/(repayment) of debt, $m
  12,565
  13,007
  13,518
  14,047
  14,598
  15,173
  15,775
  16,407
  17,071
  17,770
  18,506
  19,283
  20,102
  20,965
  21,877
  22,839
  23,853
  24,923
  26,052
  27,242
  28,496
  29,818
  31,210
  32,677
  34,222
  35,848
  37,559
  39,360
  41,255
  43,248
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  
  12,565
  13,007
  13,518
  14,047
  14,598
  15,173
  15,775
  16,407
  17,071
  17,770
  18,506
  19,283
  20,102
  20,965
  21,877
  22,839
  23,853
  24,923
  26,052
  27,242
  28,496
  29,818
  31,210
  32,677
  34,222
  35,848
  37,559
  39,360
  41,255
  43,248
Total cash flow (excl. dividends), $m
  18,142
  21,382
  24,818
  28,402
  32,142
  36,042
  40,109
  44,353
  48,782
  53,406
  58,236
  63,282
  68,559
  74,079
  79,856
  85,904
  92,241
  98,882
  105,845
  113,148
  120,811
  128,853
  137,297
  146,165
  155,480
  165,266
  175,551
  186,360
  197,722
  209,668
Retained Cash Flow (-), $m
  -15,605
  -16,156
  -16,791
  -17,449
  -18,133
  -18,847
  -19,595
  -20,380
  -21,205
  -22,073
  -22,988
  -23,952
  -24,969
  -26,042
  -27,175
  -28,369
  -29,629
  -30,959
  -32,361
  -33,839
  -35,397
  -37,038
  -38,768
  -40,590
  -42,508
  -44,528
  -46,654
  -48,891
  -51,245
  -53,721
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
  2,537
  5,226
  8,026
  10,953
  14,008
  17,194
  20,514
  23,973
  27,577
  31,333
  35,248
  39,331
  43,590
  48,037
  52,681
  57,535
  62,612
  67,923
  73,484
  79,309
  85,414
  91,815
  98,529
  105,575
  112,971
  120,738
  128,897
  137,469
  146,477
  155,947
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
  2,432
  4,784
  6,985
  9,019
  10,858
  12,478
  13,859
  14,984
  15,842
  16,427
  16,739
  16,784
  16,574
  16,127
  15,466
  14,621
  13,623
  12,509
  11,314
  10,078
  8,835
  7,618
  6,458
  5,377
  4,395
  3,523
  2,766
  2,127
  1,599
  1,174
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

Exxon Mobil Corporation is engaged in energy business. The Company is engaged in the exploration, production, transportation and sale of crude oil and natural gas, and the manufacture, transportation and sale of petroleum products. The Company also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and a range of specialty products. The Company's segments include Upstream, Downstream, Chemical, and Corporate and Financing. The Upstream segment operates to explore for and produce crude oil and natural gas. The Downstream operates to manufacture and sell petroleum products. The Chemical segment operates to manufacture and sell petrochemicals. The Company has exploration and development activities in projects located in the United States, Canada/South America, Europe, Africa, Asia and Australia/Oceania.

FINANCIAL RATIOS  of  Exxon Mobil Corporation (XOM)

Valuation Ratios
P/E Ratio 42.6
Price to Sales 1.5
Price to Book 2
Price to Tangible Book
Price to Cash Flow 15.1
Price to Free Cash Flow 56.4
Growth Rates
Sales Growth Rate -15.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -39%
Cap. Spend. - 3 Yr. Gr. Rate -13.7%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 17.3%
Total Debt to Equity 25.6%
Interest Coverage 11
Management Effectiveness
Return On Assets 2.6%
Ret/ On Assets - 3 Yr. Avg. 5.6%
Return On Total Capital 3.7%
Ret/ On T. Cap. - 3 Yr. Avg. 9.3%
Return On Equity 4.6%
Return On Equity - 3 Yr. Avg. 10.9%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 28.1%
Gross Margin - 3 Yr. Avg. 26.8%
EBITDA Margin 14.2%
EBITDA Margin - 3 Yr. Avg. 15.8%
Operating Margin 0.4%
Oper. Margin - 3 Yr. Avg. 4.7%
Pre-Tax Margin 3.6%
Pre-Tax Margin - 3 Yr. Avg. 8.4%
Net Profit Margin 3.6%
Net Profit Margin - 3 Yr. Avg. 6%
Effective Tax Rate -5.1%
Eff/ Tax Rate - 3 Yr. Avg. 18.1%
Payout Ratio 158.8%

XOM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the XOM stock intrinsic value calculation we used $290212 million for the last fiscal year's total revenue generated by Exxon Mobil Corporation. The default revenue input number comes from 0001 income statement of Exxon Mobil Corporation. 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 XOM stock valuation model: a) initial revenue growth rate of 8.1% 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 4.3%, whose default value for XOM is calculated based on our internal credit rating of Exxon Mobil Corporation, 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 Exxon Mobil Corporation.
    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 XOM stock the variable cost ratio is equal to 72.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $48083 million in the base year in the intrinsic value calculation for XOM 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 Exxon Mobil Corporation.

Corporate tax rate of 27% is the nominal tax rate for Exxon Mobil Corporation. 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 XOM 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 XOM are equal to 86.1%.

Life of production assets of 13.3 years is the average useful life of capital assets used in Exxon Mobil Corporation 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 XOM is equal to 1.7%. 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 - $191794 million for Exxon Mobil Corporation - 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 4234.810 million for Exxon Mobil Corporation 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 Exxon Mobil Corporation at the current share price and the inputted number of shares is $340.8 billion.

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