Business Valuation
Value a base and downside case
What you will learn
Build a valuation range from two internally consistent sets of assumptions.
Operating value = present value of explicit FCFF + present value of terminal value
Change connected inputs together. Lower revenue can reduce operating leverage and working capital needs at the same time. Recompute cash flows and terminal value for each scenario. State whether the discount rate is held constant to isolate operating changes. Show the value bridge and identify the assumption that matters most. A fictional listed supplier has ₹60 crore present value of explicit cash flows and ₹140 crore present value of terminal cash flows. Base operating value is ₹200 crore.
A fictional listed supplier has ₹60 crore present value of explicit cash flows and ₹140 crore present value of terminal cash flows. Base operating value is ₹200 crore.
Change connected inputs together. Lower revenue can reduce operating leverage and working capital needs at the same time. Recompute cash flows and terminal value for each scenario. State whether the discount rate is held constant to isolate operating changes. Show the value bridge and identify the assumption that matters most. A fictional listed supplier has ₹60 crore present value of explicit cash flows and ₹140 crore present value of terminal cash flows. Base operating value is ₹200 crore.
What belongs in a downside case?