Enterprise Value Calculator DCF

DCF Formula:

\[ EV = PV \text{ of Future FCF} + \text{Terminal Value} - \text{Net Debt} \]

Free Cash Flow (FCF):

USD

Growth Rate (%):

Projection Period:

years

Discount Rate (WACC):

Terminal Growth Rate:

Net Debt:

USD

Enterprise Value (EV):

PV of Future FCF:

Terminal Value:

Net Debt:

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1. What is Enterprise Value (EV)?

Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to market capitalization. It includes market capitalization plus debt, minority interest, and preferred shares, minus total cash and cash equivalents.

2. How Does the DCF Calculator Work?

The calculator uses the Discounted Cash Flow (DCF) method:

\[ EV = PV \text{ of Future FCF} + \text{Terminal Value} - \text{Net Debt} \]

Where:

\( PV \text{ of Future FCF} \) — Present value of projected free cash flows
\( \text{Terminal Value} \) — Value of cash flows beyond projection period
\( \text{Net Debt} \) — Total debt minus cash and equivalents

Explanation: The DCF method estimates the value of a company based on its future cash flows, discounted back to present value.

3. Importance of EV Calculation

Details: EV provides a more complete picture of a company's valuation than market cap alone, as it considers both equity and debt. It's widely used in mergers and acquisitions, investment analysis, and corporate finance.

4. Using the Calculator

Tips: Enter the current Free Cash Flow (FCF), expected growth rate, projection period (typically 5-10 years), discount rate (WACC), terminal growth rate (typically 2-3%), and net debt. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why use DCF instead of multiples?
A: DCF is based on the company's fundamentals and cash generation ability rather than market comparables, making it more reliable for unique companies.

Q2: What are typical WACC values?
A: WACC typically ranges from 8-12% for most companies, but can vary significantly by industry and company risk profile.

Q3: How sensitive is EV to the terminal growth rate?
A: Very sensitive. Small changes in terminal growth can significantly impact the valuation, especially for high-growth companies.

Q4: What's included in net debt?
A: Net debt includes all interest-bearing liabilities (short-term and long-term debt) minus cash and cash equivalents.

Q5: When is DCF most appropriate?
A: DCF is most useful for companies with predictable cash flows and when future performance is expected to differ significantly from the past.