DCF playground
Build a discounted cash flow valuation and, more usefully, find out how much of the answer was decided by assumptions you cannot possibly know.
Runs entirely in your browserRuns entirely on your device — nothing you type is sent anywhere. Educational only, and not investment advice.
How to use this calculator
Each step names a control you will find on screen above.
- Free cash flow now
The cash the business generates after the spending needed to keep running. Not net profit — profit includes non-cash items and excludes capital expenditure.
- Growth for the next N years and High-growth years
How fast cash flow grows, and for how long. Be suspicious of any figure above 20% held for more than five years; very few businesses have managed it.
- Growth forever after
The terminal growth rate. It must be below the long-run growth rate of the economy — a company growing faster than India forever eventually becomes India.
- Discount rate
The annual return you require for taking this risk. Higher for a volatile small-cap, lower for a utility. This one input moves the answer more than any other.
- Now change one assumption at a time
This is the actual exercise. Nudge terminal growth by a single percentage point and watch what happens to today’s fair value.
Worked example: One percentage point, seventeen percent of the value
A company generating ₹100 crore of free cash flow, growing 15% for five years, then 5% forever. You require 11% a year. There are 10 crore shares.
What to enter
- Free cash flow now
- ₹100 Cr
- Growth for the next N years
- 15%
- High-growth years
- 5
- Growth forever after
- 5%
- Discount rate
- 11%
- Shares outstanding
- 10 Cr
What it shows you
- Fair value
- ≈ ₹265 per share
- Terminal value’s share of it
- ≈ 79%
- Terminal growth 5% → 6%
- ≈ ₹309
- Discount rate 11% → 13%
- ≈ ₹196
- Defensible range
- ₹196 – ₹309
most of the answer is about years 6 onwards
+17% from one point
−26% from two points
Where this is taught
A calculator gives you a number. These explain what the number means and when it misleads you.
- Fundamental Analysis12 minDiscounted cash flowBuild a valuation from first principles, then watch how badly it wobbles — which is the actual lesson.
- Fundamental Analysis11 minFree cash flow yieldWhat the business actually puts in your pocket, divided by what you pay for it. Harder to manipulate than earnings, and it answers a different question from PE.
- Fundamental Analysis11 minRelative valuation and the margin of safetyComparing a company to its peers and to its own history — faster than a DCF, easier to abuse, and how to decide what discount you actually need.
- Fundamental Analysis12 minReverse DCF: what the price already assumesInstead of forecasting and getting a value, take the price and solve for the forecast. It turns valuation into a question you can actually answer.
- Fundamental Analysis9 minOwner earnings: Buffett’s version of profitThe cash a business could hand its owners without shrinking. How Buffett’s owner-earnings adjusts reported profit, why maintenance capex is the hard and honest part, and how it differs from free cash flow.