Basic DCF (Discounted Cash Flow) Valuation Excel Template
  • Basic DCF (Discounted Cash Flow) Valuation Excel Template
  • Basic DCF (Discounted Cash Flow) Valuation Excel Template
Originally published: 05/03/2019 09:44
Publication number: ELQ-32037-1
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Basic DCF (Discounted Cash Flow) Valuation Excel Template

You can use this tool to start learning the basic DCF Valuation for simple exercises.

Description
This is a very basic model to help you start with understanding the DCF valuation.

Discounted cash flow (DCF) - Method of valuing an investment based on its future cash flows.
DCF helps in estimating the entire company's worth. DCF is often used to estimate the future returns an investment would yield for an investor after a certain period of time.

For example, if you estimate a stock is worth £20 based on a DCF model, and it is currently trading at £10, you know it's undervalued.

The time value of money assumes that a unit of currency (USD/INR/EUR/GBP) today is worth more than itself tomorrow. For example, assuming 6% annual interest, €1.00 in a savings account will be worth €1.06 in a year. The same amount not invested would be worth much less in the future.

DCF can be very helpful in evaluating various investments or projects where an investor or an analyst can forecast the future CF's with reasonable assumptions.

DCF requires a discount rate (risk-free rate) with a return on the risk they are taking.

Certain Analysts use DCF to forecast a company's cash flow, evaluate a company's current financial position and also to forecast a company's shares intrinsic value.

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Further information

To help you learn the basics of DCF Valuation. All the formulae are typed and cells are linked.

You can use this tool to start learning the basic DCF Valuation for simple exercises or for already listed companies in the stock exchanges.

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  • Charles.HA. Chen(last updated: 01/08/2019 02:51)

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