Valuation 1: DCF


This hands-on course is focused on the practical implementation of a Discounted Cash Flow (“DCF”) valuation analysis. The skills required to build a DCF analysis will be discussed and incorporated into a financial model. Participants will learn to recognize and avoid the most common errors that finance professionals make when creating a DCF analysis. This course will also include a number of Excel tips and skills to help a user check and audit a financial model.


This course builds on "Building a Financial Model (of a Company)", so participants may want to complete that course prior to taking the "Valuation 1: DCF" session.


8 hours

Learning Topics

Review Valuation Concepts

  • Discuss various valuation methodologies and the appropriateness of using a discounted cash flow methodology to value a business
  • Use two common styles to create a DCF analysis
  • Discuss various methodologies to value the terminal period

Incorporate a DCF Analysis

  • Properly calculate a company’s levered or unlevered free cash flows
  • Build a terminal year in the model to create a steady-state perpetual cash flow
  • Review critical terminal year assumptions including Capex, depreciation, working capital, margins and income taxes
  • Calculate the tax impact of unlevering a company’s cash flows
  • Calculate the company’s cost of capital and choose an appropriate weighted average cost of capital (“WACC”) range
  • Discount the cash flows in the forecast period and ensure that the cash flows are discounted to the correct period
  • Discuss common discounting errors and review the magnitude of discounting the cash flows to the wrong time period

Understand the DCF Analysis

  • Use a number of powerful Excel tools to sensitize the outputs
  • Incorporate appropriate ratios and performance metrics
  • Create “flags” to warn the user if a covenant has been tripped
  • Conditionally format output tables to highlight specific results
Download a one-page course summary
Download Now