Reverse DCF
A normal DCF asks “what’s it worth?” A reverse DCF asks the smarter question: what is the market already assuming? Put in the price and the cash flow, and read off the growth rate baked into today’s quote.
Every cell is the implied growth rate, in percent a year, at a different pair of assumptions. The outlined cell is your current setting. Greener means an easier bar to clear, redder means the market needs heroics. Until a share price and a cash flow are entered above there is nothing to solve, and every cell shows a dash.
| Discount rate ↓ / terminal growth → | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 7.0% | 8% | 7% | 6% | 5% | 4% |
| 8.0% | 10% | 9% | 9% | 8% | 7% |
| 9.0% | 12% | 12% | 11% | 10% | 10% |
| 10.0% | 14% | 14% | 13% | 13% | 12% |
| 11.0% | 16% | 16% | 15% | 15% | 14% |
Keep going
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Work with the model
- Discounted cash flow model · online, free; starter workbook with an account
Read the method