Mohnish Pabrai DCF Calc « FINANCIAL POLITICO

Mohnish Pabrai DCF Calc

on March 24, 2008 at 5:43 am | Reply Edward

Hey thanks man, I really like how it can incorporate share repurchases and it’s possible effect on share value.
on March 30, 2008 at 10:27 am | Reply Jack

This is a great framework – I would suggest one additional feature. Using only an exit multiple for terminal value may force one to rely on a relative value judgement (ie. where do other companies that also make widgets trade at).

It mat be additive to use a perpetual growth rate and back into the implied exit multiple. This way a user of the model can i) determine the long term going concern cash flow profile of an enterprise (benchmarked against say GDP growth) and ii) rationalize that assumption against an implied multiple.