Discounted Cash Flow Building - WebMD

Overview In this exercise, you will build a full Discounted Cash Flow (DCF) model for WebMD using historical financial statements and forward-looking assumptions. Starting from detailed Income Statement and Balance Sheet projections, you will derive future free cash flows, discount them to present value, and estimate both the company’s Enterprise Value and intrinsic equity value per share. This is a realistic, end-to-end DCF practice that mirrors how equity research analysts and investment professionals value publicly traded companies. Learning Goals Understand how historical financials and forward-looking assumptions are integrated into a coherent, multi-year operating forecast. Learn how operating performance, investment decisions, and working capital dynamics translate into sustainable Free Cash Flow. Develop intuition for selecting and applying an appropriate WACC to reflect business risk and capital structure. Apply time value of money principles to convert projected cash flows into present value and assess their contribution to overall firm value. Connect Enterprise Value to Equity Value to arrive at an implied intrinsic share price, as done in professional equity research. Key Concepts Revenue Forecasting: Projecting top-line growth based on business segments and growth assumptions. Cost of Goods Sold (COGS) and Gross Margin: Understanding operating leverage and profitability. EBITDA, EBIT, EBT, and Net Income: Key profitability metrics used throughout valuation. Unlevered Free Cash Flow (UFCF): Cash generated by the business before financing costs, available to all capital providers. Non-Cash Working Capital: Calculated as Accounts Receivable − Accounts Payable + Inventory, capturing cash tied up in operations. WACC: The blended cost of equity and debt used to discount future cash flows. Terminal Value: Estimating the value of all cash flows beyond the explicit forecast period. Enterprise Value vs. Equity Value: Understanding how operating value converts into per-share valuation.

Practice Discounted Cash Flow Building - WebMD with interactive Excel modeling exercises in our DCF Modeling module.

This hands-on modeling exercise helps you master Discounted Cash Flow Building - WebMD through real-world Excel practice and financial modeling techniques.