Financial Analysis - Business Valuation, DCF, IRR, and more

Learn the discounted cash flow analysis, the most popular valuation technique. Project future cash flows and discount them to present value using the time value of money.

Explore the multiples approach by applying comparable metrics like enterprise value to EBITDA. Learn how DCF complements this method, weighing pros and cons to reconcile valuations.

Discover how to compute unleveraged free cash flow for a DCF valuation by adjusting EBIT for taxes, adding depreciation, and subtracting capex plus change in working capital.

Compute unlevered free cash flow by using EBITDA, calculating the tax effect, adding back depreciation, and adjusting for changes in net working capital and capital expenditures for DCF valuation.

Determine the discount rate as the cost of capital for debt and equity, using the weighted average cost of capital (WACC) and tax effects to discount future cash flows.

Calculate weighted average cost of capital (WACC) using enterprise value, debt, cash, tax rate, and equity cost. Explain CAPM’s role in determining the cost of equity and the discount rate.

Learn how to calculate the cost of equity with the capital asset pricing model, using the risk-free rate, beta, and market return, and apply to public and private companies.

Compute the cost of equity using the capm model with beta, risk-free rate, and market return. Tie this to weighted average cost of capital, enterprise value, and private beta considerations.

Learn to determine a private company's beta using public comparables, unlever and relever it per the capital asset pricing model and capital structure to estimate cost of equity.

Calculate the discount rate for a discounted cash flow by deriving the weighted average cost of capital from after-tax debt and the cost of equity.

Finalize the wacc calculation by linking market equity, net debt, and cash to compute the discount rate, using cost of equity and after-tax debt costs in a private company.

Calculate the unlevered beta for a private company using four public comparables, removing debt, and deriving the industry median unlevered beta.

Discount the future cash flows to present value using mid-year discounting with the discount rate (WACC or cost of equity), illustrating time value of money and a DCF terminal value.

Determine terminal value in discounted cash flow by using an exit multiple of final year ebitda, discounting to present value, and avoiding perpetuity growth due to inaccuracy.

Complete the DCF model by summing discounted cash flows and terminal value to derive enterprise value, then subtract net debt to reveal equity value, highlighting discount-rate sensitivity.

Apply a multiples approach using enterprise value to EBITDA to value a company, then compare with DCF results via sensitivity analysis and estimate equity value as EV minus net debt.

Explore how to build a multivariable sensitivity table for firm valuation using the discounted cash flow method, testing exit multiples, wacc, and ebita variations to see their impact.

Apply the multiples approach with a sensitivity data table to show how sales and EBITDA shifts affect enterprise value and overall valuation.

Create a football field valuation chart to visualize how DCF valuation and enterprise value multiples change with different assumptions, using sensitivity tables and the average cost of capital.

Learn to build a football field valuation chart, compare dcf and exit multiples, adjust axes, and present a valuation range along with a central firm value.

Evaluate a new project’s profitability by calculating startup costs, including installation, and accounting for annual maintenance. Apply inflation and tax rate to inform a project valuation decision.

Refine your case study assumptions by analyzing soda machine costs, including cups, lids, straws, and syrup, to estimate per-drink costs and margins for a valuation.

Model a seven-year revenue forecast for a soda machine by projecting units sold and price, then incorporate direct costs and indirect overhead to evaluate project viability.

Calculate annual ounces sold and convert to cups to project direct costs, including syrup, cups, lids, straws, and maintenance, inflating costs to evaluate gross and net profit.

Explore projecting indirect costs by applying company overhead to a soda machine project—rent, salaries, and utilities—using a 12% overhead rate to compute operating expenses, earnings before tax, and net income.

Compute free cash flow from net income, include depreciation, and weigh startup costs; then tweak prices and cup sizes to evaluate ROIC, IRR, and NPV toward breakeven.

Learn how return on invested capital (ROIC) measures gains relative to cost, illustrated by an example, and why IRR accounts for the time value of money.

Learn how the internal rate of return measures the annual investment return, including levered and unlevered IRR, time value of money, and its comparison to the discount rate and NPV.

Compute net present value (npv) using discounted cash flows to sum present values of inflows and outflows in Excel. A positive npv adds value, zero is neutral, negative reduces value.

Explore break-even analysis to determine how long to recover initial investment and how many units to sell, using fixed costs and unit gross profit.

Assess project viability by summing cash flows, calculating ROIC on a $7,500 investment, and determining the IRR of 24.1% against an 11.1% discount rate.

Compute net present value using the discount rate and cash flows, exclude the initial investment from the NPV, compare IRR to the rate, and assess break-even units with sensitivity analysis.

Build a sensitivity table around a 24-ounce baseline to analyze IRR and NPV across price and cup size changes, guiding go/no-go decisions.

Master dcf modeling, irr, npv, and roic as standard tools across industries. Practice by analyzing real investment opportunities and financial statements to become a confident, valuable asset to your team.