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Valuation

DCF Valuation Model

A standard 5-year discounted cash flow model: revenue build, free cash flow, terminal value, and enterprise/equity value — computed live as you type, with a WACC × terminal growth sensitivity table. Nothing you enter leaves this page.

Assumptions

Ramps linearly between year 1 and year 5.

Projection

Valuation

Sensitivity: Enterprise value by WACC & terminal growth

How this model actually works

A DCF values a business as the present value of every pound of free cash flow it will ever generate, discounted back at a rate that reflects how risky those cash flows are. Free cash flow, not accounting profit, is what it's built on: net operating profit after tax, plus depreciation and amortisation added back (it's a non-cash charge), minus the capital expenditure and working capital investment actually needed to keep the business running and growing.

Five years of explicit projections rarely capture a whole business, so the model adds a terminal value — the present value of every year of cash flow after year 5, assumed to grow at a constant rate forever (the Gordon growth formula: FCF × (1 + g) / (WACC − g)). In most DCFs, the terminal value is the majority of the total valuation, which is exactly why the sensitivity table above matters more than the year-by-year numbers: a DCF's output is far more sensitive to your WACC and terminal growth assumptions than to your revenue forecast.

Where this model is honest about its limits

Every input here is a judgment call dressed up as a number. A one-point change in WACC or terminal growth can move the valuation by double digits — which is the actual lesson of the sensitivity table: treat any single DCF output as the center of a wide range, not a precise answer. This tool also doesn't handle non-linear growth, multiple business lines, or stock-based compensation dilution — for a real deal, this is a starting frame for the conversation, not the final word.