ECMSource Research Workbench · Advanced valuation
Build a simplified free-cash-flow-to-the-firm valuation, bridge enterprise value to equity, and see how value per share changes across discount-rate and perpetual-growth assumptions.
Build the base case
Use the same currency units for revenue and net debt. Net debt equals debt minus cash; enter a negative number when cash exceeds debt.
The displayed figure is a scenario result, not a price target. Review the terminal-value share and the sensitivity matrix before drawing a conclusion.
Model boundaries
This model uses one revenue-growth rate and one free-cash-flow margin throughout the explicit forecast. It discounts free cash flow to the firm at the weighted average cost of capital, then subtracts net debt.
It does not model changing margins, stock compensation, leases, pensions, minority interests, acquisitions, tax assets, or mid-year cash flows. Treat diluted shares and net debt as deliberate inputs, not afterthoughts.
Method and evidence
FCFF = projected revenue × FCFF margin
Terminal value = final-year FCFF × (1 + perpetual growth) / (WACC − perpetual growth)
Enterprise value = PV of explicit FCFF + PV of terminal value
Equity value = enterprise value − net debt
Value per share = equity value / diluted shares