Available modeling methods
| Method / input | Behavior |
|---|---|
| Perpetuity growth | Next-period FCFF ÷ (WACC − growth), using consistent percentage units. |
| Exit multiple | Selected terminal revenue, EBITDA or EBIT × the entered multiple. |
Normalize the terminal cash flow
The terminal metric anchor is independent of the terminal-value date. Optional normalization can set revenue growth, EBIT or EBITDA margin, tax, D&A, capex, working capital and other FCFF. A direct normalized FCFF value can override the derived amount. Check whether your final modeled year represents sustainable operations before extrapolating it.
Inspect both implied checks
The perpetuity method exposes an implied exit multiple; the multiple method exposes an implied growth check where meaningful. Terminal value is discounted from its selected date, not treated as present cash. A WACC at or below perpetual growth produces an unavailable result. Negative terminal FCFF prompts review of the steady-state assumptions.
Open in the full valuation model ↗
Documents the current implemented behavior. Example assumptions are not market data.