Discounted Cash Flow

In this course, participants learn how to build a discounted cash flow valuation model.

Together we begin by making financial projections for the case company. We detail how the projections are linked to the company’s position in the industry, and the structure of the industry.

A detailed ratio analysis is used to establish the reasonableness of the forecasts and to identify when the target company reaches steady state. We analyse the weighted average cost of capital, breaking it down into its components. We also look at how to complete the valuation model by calculating terminal values, using the perpetuity growth method and the value driver formula. The free cash flows are discounted to arrive at enterprise values and the implied share price.

Once the valuation is complete, participants perform several checks on the analysis using key ratios, and sensitivity and scenario analysis.


This course is suitable for anyone with basic accounting skills, financial maths skills and excel skills.

Learning Outcomes

At the end of this course participants will be able to:

  • Make financial projections including CapEx and working capital
  • Link company’s competitive positioning and industry attractiveness to financials
  • Normalise earnings
  • Calculate cost of equity and WACC
  • Deduce terminal value
  • Discount cash flows back to find enterprise value
  • Derive equity value
  • Perform sensitivity analysis

Course Content

  • Making financial projections including CapEx and working capital
  • Linking company’s competitive positioning and industry attractiveness to financials
  • Normalising earnings
  • Cost of equity and WACC
  • Terminal value
  • Discounting cash flows back to find enterprise value
  • Deriving equity value
  • Sensitivity analysis


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