DCF Model Template: Free Download and Tutorial
A DCF model template gives investors a clear framework for estimating what a stock is worth. The discounted cash flow DCF model projects future cash flows and discounts them back to the present. This tutorial shows how to download the free dcf template, set the right inputs, and use the results for sound financial analysis in corporate finance.
What the Model Template Contains
A solid dcf template has four linked sections that work together. The first section holds historical data such as revenue, free cash flows, and capital expenditures over the past five to ten years. The second section covers the forecast period, where you enter a growth rate to project margins and future cash flows. The third section lets you calculate the terminal value by applying a perpetual growth rate to the last projected year and dividing by the discount rate minus that growth assumption. The final section adds up all the discounted present values, subtracts net debt, and divides by shares outstanding to find fair value per share.
How to Use the Discounted Cash Flow Template
Start by entering five years of free cash flows from the company financial statements. Make sure capital expenditures and working capital changes are correct. Then set a growth rate for the forecast period based on the company track record within its industry. The approach to calculating this figure should rest on actual historical trends rather than guesswork, because compounding errors in the growth rate spread across every projected year and distort the output.
Next choose the discount rate. The weighted average cost of capital blends the cost of debt and equity in line with the company capital structure. A higher discount rate produces a lower valuation by shrinking all future cash flows back to present value. A lower rate lifts the estimate. Calculate the terminal value by applying the perpetual growth rate to the final projected year and dividing by the discount rate minus that long term growth figure.
Add the discounted annual free cash flows and the discounted terminal value to get enterprise value. Subtract net debt to isolate the equity portion, then divide by shares outstanding. If the result exceeds the current stock price, the dcf analysis suggests the shares may be undervalued.
Key Inputs in the DCF Model Template
The growth rate is the most powerful input because it sets the path of future cash flows across the full forecast period. The discount rate ranks second in importance, and keeping it aligned with the weighted average cost of capital ensures the discounted cash flow dcf model stays realistic. Free cash flows show the real cash left after capital expenditures, while net debt determines how much of the total value belongs to creditors versus equity holders.
The ValueMarkers platform lets investors download the free fair value data for thousands of stocks. The screener runs a full financial analysis on each name and flags firms where the gap between fair value and stock price points to upside for long term investors.
Frequently Asked Questions
What is a DCF model template?
A dcf model template is a spreadsheet that projects future cash flows and discounts them to the present to estimate fair value. The discounted cash flow template includes historical data, a forecast period, terminal value, and the final result. You can download the free dcf template from ValueMarkers to run this approach to calculating fair value on any stock in your portfolio.