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Discounted-Cash-Flow-Analysis: Your Complete Guide with Examples

Valutico

Well, the short answer is after that forecast period where we estimate each year’s cash flows then discount them, we add a single number at the end to account for all the theoretical years in the future, called the Terminal Value (TV). Explaining The Terminal Value. How do I calculate the Terminal Value?”

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5 Simple Sense-Checks That Vastly Improve Your Business Valuation

Valutico

A useful tip is to check for consistency between the forecast margins and historical margins—EBITDA margin, EBIT margin, and Net Income margin. One critical component of the terminal value is the perpetual growth rate. Hockey stick-like growth in your DCF projections may indicate these projections are not realistic.