dcf-modelinglisted

# dcf-modeling ## When to use - A buy-build-or-partner decision needs an intrinsic-value anchor, not just a multiple. - A board pack asks for sensitivity to discount rate or terminal-growth assumptions. - An acquisition target's seller-deck IRR claims need a counter-model. Do NOT use for revenue forecasting alone, market-sizing, or comp-multiple-only screens — those route elsewhere (see Related Skills). ## Procedure ### Step 0: Inspect 1. Confirm the target has ≥3 years of audited or reviewed financials, or a clearly-labelled forecast that names every assumption. 2. Note the cognition cluster: this is **intrinsic-value cognition**, not multiple-arbitrage. ### Step 1: Lock the assumption table 1. Pull or estimate the five drivers — revenue growth (per year, declining to terminal), EBIT margin path, tax rate, capex/sales, change in net working capital/sales. 2. Decompose WACC: cost of equity (CAPM — risk-free + β × ERP), cost of debt (after-tax), capital structure target weights. 3. Pick a terminal-value method **once** — either Gordon-growth (`FCFF_t+1 / (WACC − g)`) or exit-multiple. Naming both inflates spurious precision. ### Step 2: Project free cash flow 1. Build a 5-year FCFF row: `EBIT × (1 − t) + D&A − Capex − ΔNWC`. 2. Discount each year by `1 / (1 + WACC)^t`. 3. Compute terminal value at year 5, discount back. 4. Sum PV(FCFF) + PV(TV) = enterprise value. Subtract net debt → equity value. ### Step 3: Sensitivity grid 1. Build a 5×5 grid: WACC ±200 bps × te