DCF – Basic DCF
Articles
The Discounted Cash Flow (DCF) Valuation Method: A Comprehensive Guide
The Discounted Cash Flow (DCF) method is one of the most widely used valuation techniques in corporate finance and investment banking. It helps investors determine the intrinsic value of a company by estimating its future cash flows and discounting them to present value using a discount rate.
What Is Terminal Value in a DCF? Why It Often Drives Most of the Valuation
Terminal Value captures every DCF cash flow beyond the forecast period and usually makes up 60-80% of Enterprise Value. Here's what it represents and why interviewers probe it so hard.
How to Calculate Terminal Value Using the Gordon Growth Method (Step by Step)
A step-by-step walkthrough of the Gordon Growth Terminal Value formula, with a worked example showing why it often makes up most of a DCF's Enterprise Value.
What Is a DCF? The 3-Step Logic Behind Enterprise Value
A discounted cash flow is really just three steps: project cash flow, discount it, and sum it. Here's the core logic behind every DCF, with a worked example.
How to Calculate Enterprise Value with a DCF: Step-by-Step for Interviews
A step-by-step walkthrough of calculating Enterprise Value with a DCF: forecast free cash flow, discount each year, and sum to a single valuation.
Cases
Terminal Value: Gordon Growth
As a financial analyst, you're asked in an interview: "Walk me through how you'd calculate a DCF's Terminal Value using the Gordon Growth method, and explain why the growth rate assumption matters so much." Walk through how you'd answer that question, using a sample company's final-year free cash flow to show how the terminal value is built and why it ends up dominating total enterprise value.
Simple DCF: Three Steps
As a financial analyst, you're asked in an interview: "Strip a DCF down to its purest form — no Terminal Value, no complicated build-up. Just three steps: project the cash flow, discount it, and sum it." Walk through how you'd answer that question, using a small company's three-year free cash flow forecast to show how discounting and summing alone produce an Enterprise Value.