DCF Model with Company Valuation

Description

DCF Model with Company Valuation

This Discounted Cash Flow Model with company valuation made by  Oak Business Consultant is a two-in-one model which can be used in several ways. It also calculates the expected Share Price of a company.

How to use this Model:

Basic Rule:

All the peach-colored cells are for inputs that need to be filled by you.

Inputs

You can use the scroll bars to set your desired values where applicable.

This model can be used for the following calculations.

1. The present value of all the future fixed cash inflows for a certain time.

Where “t” is the number of years when cash will be received, and “r” is the discount rate, also known as the cost of capital or interest rate applicable.

Therefore, if a person receives $1000 for 10 years each year, by the end of ten years, he will have $10,000.

But, the present value of that $10,000 is only $6,145 today, discounted at a 10% per annum interest rate.

2. This model tells you the present value of future cash in-flows for a certain period, even if the cash flows are not consistent.

You need to put in yearly cash flows manually in the Input cells. The rest is the same as above.

3. Now, the model will tell you the present value of the future cash flow if the discount rate is also changing each year.

You must put in the cash inflows and discount rate for each year. Calculations will be made based on your data.

 

Company’s Valuation

This model can also calculate the Present value of a company’s cash flows based on the Free Cash flows.

1. For now, you need to input cash inflow for year 1, i.e., the year 2020, but you can change that.
2. Input all the expected growth rates. The model is dynamic, and all the cells are linked to the input values.
3. Input the tax rate, the amount of depreciation in year 1 and the rate of change in depreciation.
4. Input the Working Capital Requirement of the company and the rate of change.
5. Lastly, input the Capital Expenditure amount for the year 2020 and the rate of change in Capital Expenditure.

This part of the model will provide you with the present value of all cash flows until the year 2025.

Now if you provide more information about the model, it calculates the company’s total value and expected Share Price of the Organisation.

This model calculates the Share Price of a company’s shares based on two different methods.

1. Growth in Perpetuity approach
2. EBITDA Multiple Approach

Both of these are highly technical and very reliable approaches to finding a True and Fair value of shares being traded in the Stock market based on factual data of the company. Just input all the values required by the model. The values can be found easily on the balance sheet of the company.

The long-term growth rate is an expected value by which the company will continue to grow after the year 2025. The EBITDA Multiple is also an expected value based on information available in the stock market. As a result, this will show you the expected fair value of the shares in the company’s stock market.

The actual price of the shares in the stock market may be different for several different economic factors. But, it is usually believed that the value of the shares in the stock market will eventually reflect this expected fair value when all the other factors become constant.

So, this calculated value indicates the Per Share Price and Total Company Value.

Who Should Use?

Anyone with even ZERO knowledge of accounting who wishes to find the discounted value of the future cash flows and calculate the total value of a company without anyone’s help can easily use this DCF model with Company Valuation.

The model is self-explanatory, and the comment boxes explain how to fill in the required information.

You can delete or hide the comment boxes. Just right-click the cell containing the comment and click “show/hide Comment” or “delete comment”.

Walk-Through Video of DCF Model with Company Valuation

The following video will give you an overview of the different components of the financial model and will help you understand it’s working.