One of our readers kindly asked us for a simple discounted cash flow model and of course we are going to deliver.
Below is the output of a basic DCF template lets take a look:
Cost of Capital:
- Enter in your BETA (not this kind of beta) by scurrying over to Bloomberg
- Add in your Risk premium, Risk Free, Cost of debt and Tax rates
- Enter in your Cash on hand, debt numbers and diluted shares outstanding
- Calculate a long-term growth rate (usually linked to GDP)
- Enter in your percentage debt and equity
Free Cash Flow:
- Code in your EBIT or link this to your three statement working model
- Run your CAPEX,, working capital (off built balance sheet) and D&A numbers through
- The sensitivity table runs off of your WACC in your assumptions tab
- You run a multiple to spot check your analysis, notably these numbers are not real so they seem quit high
That’s really it guys. Remember to keep it simple.