Finance Dcf Valuation

Finance DCF Valuation

Use this skill when the user needs a valuation workflow, not just a number.

Use when

• The user asks whether a business or asset appears undervalued, fairly valued, or stretched.
• A DCF or scenario-based fair-value view is needed.
• The task requires explicit assumptions and sensitivity rather than intuition.

Do not use when

• Inputs are too weak for any serious cash-flow view.
• The request is purely accounting analysis with no valuation angle.
• The user expects real-time market data that is not available in the current files.

Core valuation rules

• Start with a data-quality gate.
• State all critical assumptions explicitly.
• Use bull, base, and bear scenarios.
• Cross-check DCF outputs against relative valuation sanity bounds.
• Present ranges, confidence, and gaps instead of pretending a point estimate is truth.

Workflow

1. Run the input quality gate

Check:

• freshness of the periods
• completeness of revenue, margin, cash flow, debt, cash, and share inputs
• consistency of the statement package

If the data is weak, downgrade to directional valuation.

2. Build the valuation logic

At minimum, make explicit:

• forecast horizon
• revenue path
• margin path
• reinvestment and working-capital assumptions
• discount-rate logic
• terminal-value method

3. Scenario the result

Always provide:

• bull
• base
• bear

Each scenario should state what changes and why.

4. Run sensitivity and sanity checks

Sensitivity should cover at least:

• discount rate
• terminal growth or exit assumption

Sanity checks should ask:

• does the implied range make sense against market or peer multiples
• is terminal value dominating too much
• are the assumptions drifting into optimism rather than analysis

5. Conclude with confidence and safety zone

The final answer should say:

• fair-value range
• confidence level
• key gaps that could move the conclusion
• margin-of-safety discipline

Do not issue personalized investment advice.

Output format

Return:

1. Data quality gate

• freshness
• completeness
• confidence tier

2. Scenario assumptions

• bull
• base
• bear

3. Valuation work

• DCF summary
• sanity-check view
• sensitivity summary

4. Fair-value view

• range
• safety zone
• what would change the view materially

Use together with

• finance-financial-statement-analysis
• finance-ratio-benchmarking
• finance-investment-memo