Free business valuation DCF calculator: discount cash flows and terminal value for US small business. No signup.
Last updated 2026-05-28 · Davi Baptista
How it works
Free business valuation calculator from Fynvorax. Estimate enterprise and equity value with a multi-period discounted cash flow (DCF) model.
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<p>We consider that business enterprise evaluation is the key step of serious capital transactions. To estimate what an active company is worth, looking at static asset book values or arbitrary historical costs is simply misleading. Real financial value is always a forward-looking metric—it represents the discounted net present value of all cash streams that a business can reliably produce for its equity owners over time. Our professional Discounted Cash Flow (DCF) model compiles these mechanics, assisting in M&A deals, commercial buyouts, and partner negotiations.</p>
<h3 class="text-lg font-bold text-white mt-4">The Logic of Discounted Cash Flow (DCF)</h3>
<p>A multi-period DCF assessment uses three primary mechanics: <strong>forecast period cash flows, discount factors, and terminal values</strong>. First, we project the Free Cash Flow (FCF) for a 5-year period. Year 1 builds on your base inputs, while Years 2 through 5 grow compoundly based on the specified growth parameter.</p>
<p>Next, we apply the <strong>Weighted Average Cost of Capital (WACC)</strong> as the discount rate. It represents the opportunity cost of capital for both debt and equity providers. FCFs received in future years are discounted back to today: <strong>PV = FCF_i / (1 + WACC)^i</strong>.</p>
<p>Finally, since the corporate entity is assumed to operate indefinitely, we compute the <strong>Terminal Value (TV)</strong> utilizing the perpetual growth formula: <strong>TV = FCF_5 * (1 + Terminal Growth) / (WACC - Terminal Growth)</strong>. This TV is then discounted to present value. Summing the present values of our 5-year cash flows and the terminal perpetuity yields the total <strong>Enterprise Value (EV)</strong>.</p>
<h3 class="text-lg font-bold text-white mt-4">From Enterprise Value to Equity Value</h3>
<p>The Enterprise Value represents the consolidated worth of the business infrastructure to all stakeholders. For potential stock or partnership transactions, you must determine the Net Equity Value. We accomplish this by adjusting for leverage: <strong>Equity Value = Enterprise Value - Total Net Debt</strong>. Your net debt input subtracts total short and long-term liabilities while adding excess cashier cash equivalents.</p>
<h3 class="text-lg font-bold text-white mt-4">Valuation Pros & Cons</h3>
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<h4 class="font-semibold text-emerald-400 mb-2">Discounted Cash Flow Model Advantages</h4>
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<li><strong>Pro:</strong> Directly links business valuation to tangible cash flow production.</li>
<li><strong>Pro:</strong> Highly academic and standard among investment bankers and auditors worldwide.</li>
<li><strong>Pro:</strong> Avoids market multiple bias when buying niche unlisted companies.</li>
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<h4 class="font-semibold text-emerald-400 mb-2">Technical DCF Limitations</h4>
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<li><strong>Con:</strong> Highly sensitive to minor changes in growth or cost of capital (WACC) inputs.</li>
<li><strong>Con:</strong> Assumes relative operational stability over the projection periods.</li>
<li><strong>Con:</strong> WACC computation can be complex for small private lifestyle enterprises.</li>
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Frequently asked questions
What is the difference between Enterprise Value (EV) and Equity Value?
Enterprise value (EV) reflects the total value of the business, including debt and equity. Equity value is what belongs to shareholders: Equity Value = Enterprise Value - Net Debt.
How does the discount rate (WACC) affect corporate valuation?
A higher discount rate (WACC) lowers present value of future cash flows because future dollars are worth less today when risk is higher. Small WACC changes can materially change valuation output.
What is a reasonable discount rate (WACC) for a small business?
Often 10–15% for private small businesses (higher than large caps) reflecting risk and illiquidity. Public comparables and cost of debt/equity refine the estimate.
Enterprise value vs equity value?
EV includes debt holders' claim; equity value ≈ EV − net debt. Buyers care about both depending on deal structure.