Start with the cash. Test your assumptions.

• The model assumes a debt-free business, no excess cash and a fixed share count. It assumes cash is available to equity holders after necessary reinvestment. It does not automatically convert reported free cash flow into cash available to shareholders.
• For a real business, review annual reports and recent results. Justify sustainable cash, margins, growth, reinvestment and the return needed for the risk. Check lenders, leases, dilution and other claims before choosing a suitable valuation method.
• Cash grows at each scenario rate for five years, then at the continuing rate indefinitely. Even the weak example assumes eventual stabilization. Permanent decline can require a different outcome. Continuing growth must be economically sustainable and below the required return.
• All cash arrives at year-end. The starting cash is a run rate, not an extra immediate payment. Rates and cash must share the same currency and inflation basis. The model omits shareholder taxes and dealing costs.
• Shares in banks, pre-profit businesses and companies with complex financing need different analysis. This simple worksheet is not suitable for every company.

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For each year from 1 to 5, cash equals starting cash multiplied by (1 + growth) to the power of that year. Each amount is divided by (1 + required return) to the same power.

Continuing value at year 5 equals year-5 cash × (1 + continuing growth) ÷ (required return − continuing growth). Discount that value back five years and add it to the first five discounted cash amounts.

Methodology: NYU Stern — discounted cash flow and terminal value. Inputs: original TTMP fictional example, 4 November 2026.