Discounted Cash Flow Valuation Excel Model

The Discounted Cash Flow (DCF) Valuation is one method to estimate current value of a business.

by Jason D'Errico, MBA
Financial Reporting SpecialistFollow

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Description
The Discounted Cash Flow (DCF) Valuation is one method to estimate the current value of a business.. This model currently projects 5 years of financial data and can be expanded out further if needed. Included in the template you will find:

• The Income Statement, Balance Sheet and Cash Flow Statement
• An Assumptions Section with 3 scenarios for the financial forecast
• Schedule tabs for Fixed Assets, Long-Term Liability, and Equity
• Discounted Cash Flows projection with Sensitivity Analysis
• Charts and Graphs for various key measurements

All historical data from previous income statements and balance sheets can be entered into the Database tabs to dynamically flow into the 3 Statement Model tab. The assumptions tab identifies a best, base, and worse case scenario for a variety of key measurements and can be customized to follow any criteria desired. These assumptions flow into the Income Statement where the Net Income ties into the Balance Sheet. The bottom of the Balance Sheet includes an error check to make sure the sheet balances. The Cash Flow Statement ties into the Income Statement and Balance Sheet to give you a projected Net Cash Flow for the next 5 years. The DCF tab gives you the 5 year valuation of the business by calculating the enterprise and equity values with a sensitivity analysis given differing WACC and Growth Rate percentages. Lastly, the models gives you a few charts and graphs highlights a few key financial figures such as Revenue and EBITDA, Working Capital and DCF Valuation scenarios. The graph tied to the DCF Results must be filled in manually to correspond to your specific results given each scenario.

All cells in black font are input cells where custom information can be entered. All cells in blue font are formulas set to streamline the model.

This Best Practice includes
1 Excel Spreadsheet