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:
All the peach-coloured cells are for inputs which need to be filled by you.
You can use the scroll bars to set your desired values where applicable.
This model can be used for the following calculations.
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 will receive $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 10% per annum interest rate.
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.
Now, the model will tell you the present value of the future cash flow if the discount rate is also changing each year.
You need to put in the cash inflows and the discount rate for each specific year. Calculations will be made based on your data.
This model can also calculate the Present value of Cash flows of a company based on the Free Cash flows.
- You need to input cash inflow for year 1 i.e. the year 2020 for now but you can change that.
- Input all the expected growth rates. The model is dynamic and all the cells are linked to the input values.
- Input the tax rate, the amount of depreciation in year 1 and the rate of change in depreciation.
- Input the Working Capital Requirement of the company and the rate of change.
- Lastly, input the Capital Expenditure amount of 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 some more information to the model. It calculates the Total Value of the company, along with the expected Share Price of the Organisation.
This model calculates the Share Price of a company’s shares based on two different methods.
- Growth in Perpetuity approach
- 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 a 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 stock market of the company.
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 is a good indication of the Per Share Price and Total Company’s Value.
Who Should Use?
Anyone with even ZERO knowledge of accounting, who wish to find the discounted value of the future cash flows and to calculate the total value of a company without using any one’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 simply right-click the cell which contains the comment and click “show/hide Comment” or “delete comment”.