VALUATION LAB
Explore financial ratios and discounted cash flow using your own financial data and assumptions. Understand how growth, risk, and valuation methods influence estimated business value.
Educational tool only, not investment advice. Every figure is entered by you and is not verified by Scope.
The methods
No single method gives the answer. Each one shows a different side of a business, and each depends on the numbers you give it.
Workspace
Enter your own numbers. Each calculator shows a result as soon as its own inputs are complete, so you do not need to fill in everything.
All data on this page is entered by you. Scope does not check it, and nothing here is live market data. Results are estimates that depend on your assumptions. This is an educational tool, not personalized investment advice.
Ratios relate the price of a business to its results. They are a starting point for questions, not a verdict.
P/E = Share Price ÷ EPS
P/EN/A
Market Cap = Share Price × Shares · P/S = Market Cap ÷ Revenue
P/SN/A
A two-stage model of free cash flow to the firm. You choose the growth, discount rate, and terminal growth, and the table shows every step.
The growth, discount, and terminal rates start as illustrative examples. They are not estimates for any real company. Replace them with your own assumptions.
Free cash flow to the firm for one full year. Use one unit for FCFF, cash, debt, and shares (for example, all in millions).
A firm-level rate such as WACC. Higher rates lower the estimate.
Long-term yearly growth after the forecast. Must be lower than the discount rate.
The DCF cannot be calculated yet. Complete or correct the items below. Nothing is filled in for you, and no number is shown until every required input is valid.
Key terms in the DCF
What it is. The cash a business generates after operating costs, taxes, and the investment it needs, available to all of its capital providers.
Why it is used. The DCF model values a business by the cash it is expected to generate, and this is the cash flow it starts from.
Limitation. There are several ways to calculate it, and a single year can be unusually high or low. A negative starting value makes the model hard to interpret.
What it is. The yearly rate used to bring future cash flows back to today's value. In this model it is a firm-level rate such as WACC.
Why it is used. A cash flow received later is worth less today. A higher rate means a lower present value.
Limitation. There is no single correct rate. It is an estimate, and it must match the cash flow type: FCFF goes with a firm-level rate, not a cost of equity.
What it is. The steady yearly growth assumed for cash flows after the forecast period ends, continuing indefinitely.
Why it is used. A business is assumed to last beyond the forecast years, so the model needs a rate for that long-term stage.
Limitation. It must be lower than the discount rate. A very high rate would imply the business outgrows the economy forever.
What it is. The value, at the end of the forecast, of all the cash flows after it, calculated with a steady growth rate.
Why it is used. Most of a business's value often lies beyond the explicit forecast, so the model needs a way to include it.
Limitation. It is often a large share of the total and is very sensitive to the discount rate and terminal growth. Check how large that share is.
What it is. The estimated value of the whole business's operations: the present value of forecast cash flows plus the present value of terminal value.
Why it is used. It is the value before taking the capital structure (debt and cash) into account.
Limitation. It is an estimate from your assumptions. It is not the same as market capitalization.
What it is. Enterprise value plus cash, minus debt and other claims. It is the part that belongs to shareholders.
Why it is used. Shareholders own what is left after the other claims on the business are covered, so this is the number divided by shares.
Limitation. It depends on balance sheet figures you enter and on their date. It can be negative if claims exceed enterprise value.
What it is. The number of shares counting not only existing shares but also those that could be created by options and similar instruments.
Why it is used. Dividing by diluted shares avoids overstating the value of each share when more shares could be issued.
Limitation. The figure comes from reports and changes over time. It must use the same unit as the other amounts (for example, millions).
Compare three sets of assumptions side by side. Each one runs through the same DCF engine.
Scenarios show how value changes when assumptions change. They are not predictions, and the starting values are illustrative examples. Scenarios share the starting FCFF, cash, debt, shares, and forecast period from the DCF inputs, and each uses one growth rate for every year. Editing a scenario never changes the main DCF.
A more cautious set of assumptions, such as lower growth or a higher discount rate.
Used for every forecast year.
This scenario cannot be calculated yet. No number is shown until its inputs, and the DCF inputs it shares, are valid.
A middle set of assumptions that you consider reasonable.
Used for every forecast year.
This scenario cannot be calculated yet. No number is shown until its inputs, and the DCF inputs it shares, are valid.
A more optimistic set of assumptions, such as higher growth or a lower discount rate.
Used for every forecast year.
This scenario cannot be calculated yet. No number is shown until its inputs, and the DCF inputs it shares, are valid.
| Item | Bear Case | Base Case | Bull Case |
|---|---|---|---|
| Annual FCFF growth | 3.0% | 8.0% | 12.0% |
| Discount rate | 12.0% | 10.0% | 9.0% |
| Terminal growth rate | 1.5% | 2.5% | 3.0% |
| Enterprise value | Unavailable | Unavailable | Unavailable |
| Equity value | Unavailable | Unavailable | Unavailable |
| Terminal value share of EV | Unavailable | Unavailable | Unavailable |
| Estimated value per share | Unavailable | Unavailable | Unavailable |
See how much the estimate moves when the discount rate and terminal growth change a little. Small changes can have large effects.
Each cell reruns the main DCF with a different discount rate and terminal growth rate. Everything else stays as entered in the DCF inputs, and exploring this table never changes them. The center cell is the main model.
Percentage points between rows (up to 5).
Percentage points between columns (up to 5).
Note No cell could be calculated yet. Complete the DCF inputs above and check that the discount rate is higher than the terminal growth rate.
Estimated value per share. Rows are discount rates. Columns are terminal growth rates. Select a cell to see what is behind it.
| Discount ↓ / Terminal growth → | 1.5% | 2.0% | 2.5% (main model) | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.0% | |||||
| 9.0% | |||||
| 10.0% (main model) | |||||
| 11.0% | |||||
| 12.0% |
The cell with the heavier outline is the main model. N/A means the value was not calculated.
No cell selected.
Compare an estimated value per share with the share price you entered. It depends entirely on the assumptions behind the estimate.
Margin of Safety (%) = (Estimated value per share − Share price) ÷ Estimated value per share × 100
The share price comes from Company and market above.
Margin of SafetyN/A
The selected valuation cannot be calculated yet. Complete or correct its section above first.
What it is. How far an estimated value per share is above or below the share price, as a percentage of the estimate.
Why it is used. It shows how much your own assumptions would need to be wrong before the price and the estimate meet.
Limitation. It is only as good as the estimate and the price you entered. It does not guarantee against loss, and it is not a recommendation.
Everything you entered and everything the calculators returned, in one place.
This page restates what you entered and what the calculators returned. It is not a recommendation, a target price, or a prediction.
Note The main DCF assumptions are still the illustrative examples. The scenario assumptions are still the illustrative examples. They are not estimates for any real company.
| Output | Result | Status |
|---|---|---|
| P/E (EPS: Trailing 12 months) | N/A | Waiting for input |
| P/S (revenue: Fiscal year) | N/A | Waiting for input |
| Main DCF: estimated value per share | N/A | Waiting for input |
| Main DCF: enterprise value | N/A | Main DCF |
| Main DCF: equity value | N/A | Main DCF |
| Main DCF: terminal value share of EV | N/A | Main DCF |
| Bear Case: value per share | N/A | Waiting for input |
| Base Case: value per share | N/A | Waiting for input |
| Bull Case: value per share | N/A | Waiting for input |
| Sensitivity range: value per share | N/A | Unavailable |
| Margin of Safety (Base Case) | N/A | Waiting for input |
Learn
Eight short lessons behind the tools above. Every example uses made-up numbers to show the idea. None of them describes a real company.
Valuation is the process of estimating what a business may be worth, using information and assumptions. The share price is what the market asks today. A valuation is an estimate that depends on the inputs and views of whoever builds it. The two can differ, and neither is certain.
Hypothetical example · Two people, one business
The price-to-earnings ratio compares the share price with the profit each share produced. It tells you how many years of that profit the price represents.
P/E = Share price ÷ EPS
Hypothetical example · A made-up company
The price-to-sales ratio compares the value of the whole company's equity with its revenue. It is useful when profit is small or negative, but it ignores profit entirely.
Market cap = Share price × Shares outstanding
P/S = Market cap ÷ Revenue
Hypothetical example · A made-up company
A discounted cash flow model estimates what a business's future cash flows could be worth today. It forecasts cash flows for some years, adds a terminal value for the years after, brings everything back to today with a discount rate, and then adjusts for cash and debt.
FCFF(t) = FCFF(t−1) × (1 + growth)
PV = FCFF(t) ÷ (1 + r)^t
Terminal value = FCFF(n) × (1 + g) ÷ (r − g)
EV = Σ PV of forecast + PV of terminal value
Equity value = EV + cash − debt − other claims
Value per share = Equity value ÷ diluted shares
Hypothetical example · A made-up company
The discount rate turns future cash flows into today's value. Cash received later is worth less than the same cash today, because of time and risk. The more risk you see, the higher the rate you may choose, and the lower the present value.
Present value = Cash flow ÷ (1 + r)^t
Hypothetical example · One cash flow
A forecast has to stop somewhere, but the business may not. Terminal value captures the cash flows after the forecast, assuming steady growth forever. It is often the largest part of a DCF.
Terminal value = FCFF(n) × (1 + g) ÷ (r − g)
Hypothetical example · Using the DCF example above
Sensitivity analysis shows how an estimate changes when one or two assumptions change. Instead of one answer, you see a range, and you learn which assumptions matter most.
Hypothetical example · Using the DCF example above
Margin of safety compares an estimated value per share with the share price. It is a way to see how much room your assumptions leave before price and estimate meet.
Margin of Safety (%) = (Estimated value − Price) ÷ Estimated value × 100
Hypothetical example · A made-up estimate