9. Finally, you can also use the information in Thomson ONE to value the entire corporation. This approach requires that you estimate XOM’s annual free cash flows. Once you estimate the value of the entire corporation, you subtract the value of debt and preferred stock to arrive at an estimate of the company’s equity value. Divide this number by the number of shares of common stock outstanding, which yields an alternative estimate of the stock’s intrinsic value. This approach may take some more time and involve more judgment concerning forecasts of future free cash flows, but you can use the financial statements and growth forecasts in Thomson ONE as useful starting points. Go to Worldscope’s Cash Flow Ratios Report (which you find by clicking on FINANCIALS, FUNDAMENTAL RATIOS, and WORLDSCOPE RATIOS) to find an estimate of “free cash flow per share.” Although this number is useful, Worldscope’s definition of free cash flow subtracts out dividends per share;

therefore, to make it comparable to the measure used in this text, you must add back dividends. To see Worldscope’s definition of free cash flow (or any term), click on SEARCH FOR COMPANIES from the left toolbar and then select the ADVANCED SEARCH tab. In the middle of your screen, on the right-hand side, you will see a dialog box with terms. Use the down arrow to scroll through the terms, highlighting the term for which you would like to see a definition. Then, click on the DEFINITION button immediately below the dialog box.