Corporate finance / Rebuilt
DCF valuation
Separate enterprise value, net debt and equity value.
Your assumptions
01 / 02Your scenario
02 / 02Enterprise value
Initial example. Change assumptions to explore a scenario.
Equity—
Value per share—
Terminal-value share—
Discounted cash flows and terminal value (€m)
Result breakdown (M€)
| Year | Cash flow | Present value |
|---|
The method, not a black box
The input is year-one cash flow: no additional growth is applied before that first year. Use cash flows to all capital providers, after reinvestment and operating taxes.
FCFFₜ = FCFF₁ × (1+g)ᵗ⁻¹ ; TVₙ = FCFFₙ × (1+g∞)/(WACC−g∞). EV = Σ FCFFₜ/(1+WACC)ᵗ + TVₙ/(1+WACC)ⁿ. Equity = EV + cash − debt.
Reference: CFA Institute — Free Cash Flow Valuation ↗
What the result does not tell you
End-of-year convention and perpetual growth: WACC must exceed terminal growth. Enter non-operating excess cash. Excludes adjustments for non-controlling interests, pensions, options or special assets.
Starting values are examples. No result guarantees a return, credit decision or tax treatment.