How it works
FCFF is cash available to all capital providers after operating taxes and reinvestment, before financing payments. Discount nominal USD FCFF at a compatible nominal WACC at each year end. Quick grows the time-zero base; Detailed uses the entered annual flows. The base is never an extra discounted payment.
FCFF = EBIT × (1 − corporate tax rate) + depreciation − capital expenditure − increase in noncash working capital
FCFF_t = FCFF_0 × (1 + growth)^t; PV_t = FCFF_t / (1 + WACC)^t
FCFF_(N+1) = FCFF_N × (1 + g); TV_N = FCFF_(N+1) / (WACC − g)
PV_TV = TV_N / (1 + WACC)^N; operating EV = Σ PV_t + PV_TV
Common equity = EV + excess cash + nonoperating assets − debt − preferred claims − noncontrolling interests + other net adjustments
Value per share = common equity / valuation share count; model price gap = (value per share / user market price − 1) × 100
Worked example
Illustrative example: base FCFF $1,000,000, zero forecast and terminal growth, 10% WACC, five year-end flows. Forecast PV is $3,790,786.77 and terminal PV is $6,209,213.23, totaling $10,000,000. Add $2,000,000 excess cash and subtract $3,000,000 interest-bearing debt: common equity is $9,000,000, or $9.00 for 1,000,000 valuation shares.
With the same 2% explicit and perpetual growth and 10% WACC, EV is $12,750,000 at any supported horizon: $1,020,000 / 0.08. Shares and the equity bridge are separate.
Assumptions & sources
All defaults are illustrative assumptions, not company filings, observed market values or recommendations. Edited values remain user supplied and unverified.
Use nominal USD, compatible annual periods and independently checked valuation shares. Money and share scales are independent; changing a scale preserves amounts or explicitly refuses a precision-losing conversion.
Excess cash and nonoperating assets must not already be valued in FCFF. Enter interest-bearing debt, not total liabilities; never double-count cash with net debt or dilution with a separate option claim.
A spread of 0.5 percentage point or less and a terminal contribution above 75% trigger application warnings, not official rules. A valid formula does not make a fragile valuation reliable.
No automatic WACC, CAPM, statements, SEC ingestion, prices, precise dilution, mid-year discounting, exit multiple, FCFE, DDM or bank/insurance valuation. This is not a liquidation or personal tax model.
Methodology references
- FCFF valuation models — NYU Stern · Aswath Damodaran
- Estimating terminal value — NYU Stern · Aswath Damodaran
- SEC filing search — U.S. Securities and Exchange Commission
- Treasury interest-rate statistics — U.S. Department of the Treasury
Official sites can restrict automated or regional access. Source identity and numerical verification are separate. All calculation inputs and source metadata stay in browser memory.
FAQs
What does this DCF estimate?
The present value of operating FCFF plus a perpetual-growth terminal value. A separate bridge then estimates common equity and per-share value using your inputs. It is a model, not a promised stock price.
Can I enter net income or dividends as FCFF?
Not without a defensible reconciliation. FCFF uses operating after-tax profit, depreciation and reinvestment before financing payments. CFO minus capital expenditure is not automatically equivalent across accounting and interest conventions.
Why must WACC exceed terminal growth?
The terminal denominator is WACC minus growth. Equal or higher growth does not produce a valid finite growing-perpetuity value. The calculator refuses the cell instead of substituting an arbitrary small number.
How do negative or zero cash flows behave?
Negative early FCFF is allowed; enter an explicit recovery in Detailed mode. A negative final forecast flow preserves forecast PV but blocks a normal terminal valuation. A zero final or next-period flow gives zero terminal value, not an automatic liquidation conclusion.
Is the price gap an expected return?
No. It compares a model per-share value with a positive, dated price that you supplied. It excludes timing, uncertainty, future distributions and trading costs. Negative residual equity is not a valid negative trading target.
Which share count should I use?
A valuation-date share count whose basic or adjusted basis you have checked. Account for dilution consistently; the tool does not price options or convertible securities, and does not automatically reconcile weighted-average EPS shares with period-end shares.
Are the defaults official market data?
No. They are illustrative. SEC filings and Treasury observations can inform separately checked inputs; a Treasury rate is not a company WACC, and a historical growth rate is not a forecast. Reset restores the example, not an official number.
Are my figures transmitted or saved?
No. Valuation calculations and metadata stay in browser memory. Share uses only the canonical page link; reporting sends only its approved minimal fields. Anonymous operational counters never include these financial values.