How to perform a Discounted Cash Flow Model Step by Step! (Intrinsic Value for Beginners)

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In this video, I take you step by step on how to perform a discounted cash flow analysis. Let me know if you have any questions in the comments below!

Terminal Value formula: =J14*(1+K18)/(K19-K18)

I am not a Financial advisor or licensed professional. Nothing I say or produce on YouTube, or anywhere else, should be considered as advice. All content is for educational purposes only. I am not responsible for any financial losses or gains. Invest and trade at your own risk. Some of the links in the description may be affiliate links.

[alvareza]

You keep putting stuff up like this. I’m thinking more and more of that patreon. It’s quality stuff. I’m working on my MBA and you break it down like my professor does but without the huge price tag of tuition.

[masterboxxx]

Out of 100 videos I've watched, your explanation is by far the best. Thank you for taking the time to create such a clear and concise video and thats coz u walk step by step

[alanden]

Good information. Only thing I would include is a margin of safety. This would be applied to the DCF share price to provide some allowance for error in the equation/market.

[utkarshgaikwad]

You forgot to add a Margin of safety in this calculation

[imcinema]

Good work! Two questions, why do you have 2021 two times on the FCF Growth numbers? And how do you get your first number on FCF growth when the formula is based on the previous year? Thanks!

[thepickyinvestors]

Great video. One thing I think many people struggle with is with getting to that terminal growth value.

[scurekconsulting]

What is the difference between Total Debt and Total Liabilities for a company? And why are we using Total Debt in the DCF? Take Monster Energy for example. Total Debt is 29M Yet Total Debt is 1.2B. Huge gap. Why is this? BTW love the videos

[stefanandreiclim]

Thank you for the very well explained videos. One question, where can i find the Free Cash Flow? On macrotrends it is not available anymore and on Yahoo Finance and Seeking Alpha only for the last 5 years. Thank you again and keep up the good work :)

[alexzander]

Hi. Why did you use the 10 as the discount period for terminal value? Most things All other resources I see recommends using the last period (9)

[SuperTWIY]

in other tutoials the year for the calculation of present value (the number behind the ^) of the terminal value is set to the last of the growth years. in this one he seems to use one year after (11)

[ericanderson]

1) why are there 2 cells for 2021 and why did you put 2020 numbers in 2021 and 2019 numbers in 2020

2) why are you dropping zeroes for cash and cash equivalents, Total debt, and double the number of zeros for shares outstanding?

[ARM]

Hi just a question, did you calculate all numbers in $ 000 ? Does it mean the final DCF price /share should also be multiplied by 1000 to reach at normal numbers ?

[aryanjain]

Hey great video. Just wondering if the shares outstanding is 16.07 Billion, shouldn't equity value be divided by 16070000 to be consistent with the short form you choose? and so the DCF price would be a lot lower?

[AndrewMarriott-co]

Hi. Can a DCF model be used for a company with negative Average growth Rate (e.g., due to an anomalous year in the past), since extrapolating a negative average growth rate out into the future will just ultimately generate a negative equity value (which may not make sense)?

[staceygeez]

Thank you so much. You really helped me create something that is real and I actually understand. Unfortunately, I didn't get this from my instructor.

[theoldworldwasbetter]

At 8:34, "sum of cash flows", should this include or exclude the terminal value? (Cell K15). You include it in the sum, but in this way we sum up all future cash flows and the terminal value of all future cash flows, and this would seem a duplication of the latter?

[luxlucis]

Hi. I'd like to ask you few questions:

1. Why did you use total debt in your calculation? First of all, the company has other form of assets (like long term assets) that can be liquidated to pay off the debt. Isn't it correct to use current debt instead?

2. Why one should use 10 year projection? I have seen 5-7 as well, however the results my differ hugely.

Thanks

[bomar]

I recommend you review your spreadsheet video for possible things to correct, that may be confusing

[Raqonteur]

Excellent video. As a relatively new investor this was something I've been looking for. Simple. Well explained.

One question. Using Yahoo Finance (from the Uk) I can't seem to find a figure for total debt. there is current debt and long term debt but no total. is it the total of these two figures or total liabilities or something else altogether?

[TheCashFlowChannel]

Great video. DCF is my favorite methode. You are constantly getting a lot of views on your videos. Do you have any tips for me? :)