> For the complete documentation index, see [llms.txt](https://help.modelreef.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.modelreef.io/help/stock-ticker-fundamentals/default-valuation-assumptions.md).

# Default Valuation Assumptions

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This article explains the default valuation assumptions Model Reef applies when you build a model from Stock Ticker fundamentals and how you can change them for your own analysis.
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You will learn:

* Which valuation settings are pre configured.
* How free cashflows are calculated in the base case.
* How discount rates and terminal value settings are chosen.
* How to override defaults for professional valuation work.

### Valuation overview for ticker based models

When you import ticker fundamentals, Model Reef automatically sets up:

* Free Cashflow to the Firm (FCFF) based valuation.
* Free Cashflow to Equity (FCFE) based valuation.
* A default discount rate (for example a proxy for WACC).
* A default equity discount rate for FCFE.
* A baseline terminal value method.
* Core outputs such as NPV, IRR, money multiple and payback period.

These defaults are meant to give you a usable valuation immediately, not to replace a full professional valuation process.

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Defaults are starting points. Review and adapt every assumption to reflect company-, industry- and country-specific factors before using for decision-making.
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### Default free cashflow construction

In a ticker based model, default FCFF and FCFE are typically constructed as:

* **FCFF**
  * Starts from EBITDA or operating cashflow.
  * Adjusts for working capital changes if data is available.
  * Subtracts estimated tax.
  * Excludes financing flows such as interest and debt movements.
* **FCFE**
  * Starts from FCFF.
  * Subtracts interest and debt repayments.
  * Adds debt drawdowns and equity injections where they appear.
  * Represents cashflows available to equity holders.

The exact mechanics follow the global valuation engine rules in Model Reef, applied to the variables created from the fundamentals.

### Default discount rates

Model Reef will assign default discount rates based on generic assumptions, for example:

* A base **WACC** level suitable for a typical listed company in a given market.
* A higher **equity discount rate** for FCFE to reflect equity risk.

These are placeholders only. You should adjust them to reflect:

* Capital structure.
* Industry risk.
* Country risk.
* Company specific risk factors.
* Your own valuation policy or investment committee guidelines.

### Default terminal value settings

By default, ticker based models use one of two terminal value approaches:

* A simple **multiple based approach**, using a reasonable EBITDA or cashflow multiple.
* Or a **Gordon growth style** approach with:
  * A modest long term growth rate.
  * The chosen discount rate.

The defaults are intentionally conservative and generic. You can:

* Change the chosen metric (EBITDA, FCFF, FCFE).
* Change the multiple or long term growth rate.
* Change the terminal year or horizon.
* Switch between methods if you prefer one over the other.

### Adjusting valuation assumptions

To bring a ticker based model in line with your valuation standards, you should:

* Review and update **discount rates** with reference to your own WACC or cost of equity estimates.
* Adjust **terminal growth rates** to match long term expectations for the business and market.
* Review **terminal multiples** against peer sets or historical trading ranges if you use the multiple method.
* Check that **tax settings** and **capex assumptions** are appropriate for the company and sector.
* Consider building **alternative scenarios** for bull, base and bear cases.

All valuation settings are editable and can differ between models and scenarios.

### Using ticker based valuations in workflows

Once valuation assumptions are in place, you can use ticker based models to:

* Compare different companies on a consistent valuation basis.
* Track how value responds to changes in growth, margins, capex or capital structure.
* Build scenario based valuation packs for investment committees.
* Integrate listed peer valuations into broader portfolio or transaction models.

The Stock Ticker fundamentals import gives you the historical foundation. Your valuation adjustments turn it into a decision ready model.

## Related articles

* [Group-Level Consolidated Reporting](/use-cases/hospitality-groups-multi-venue/group-level-consolidated-reporting.md)
* [Build a Multi Scenario Valuation Pack](/how-tos/valuation/build-a-multi-scenario-valuation-pack.md)
* [Financial Outputs & Valuation](/help/financial-outputs-and-valuation.md)
* [Economic Driver Fields](/syntax/drivers-syntax/economic-driver-fields.md)