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