What this calculator cannot do
An honest account of where a discounted cash flow model stops being useful, and where this implementation stops.
This calculator is for educational and informational purposes only. It is not financial, investment, tax, accounting, or legal advice. Verify all inputs and calculations independently.
Limits of the method itself
A DCF converts assumptions into a number. It cannot improve the assumptions, and it cannot warn you that they are wrong. A confidently precise output from poor inputs is still a poor answer, and the tidy formatting makes it look more authoritative than it is.
The method is most reliable for mature, profitable businesses with steady cash generation. It is least reliable exactly where people most want a number: fast-growing companies, cyclical businesses at a turning point, and anything loss-making.
Because the terminal value routinely exceeds half the total, most of a DCF’s answer comes from the period you did not forecast in detail. That is inherent to the method rather than specific to this implementation.
Limits of this implementation
There is no market data of any kind. You enter every figure yourself, including the share price you want to compare against. This is a deliberate privacy and licensing choice, not a gap we intend to close with a paid data feed.
The model assumes one discount rate for the entire forecast horizon and one capital structure throughout. Real companies refinance, change their risk profile and issue or retire shares.
Share count is a single diluted figure. The tool does not model option schedules, convertible instruments or buyback programmes over time.
Taxes appear only inside the discount rate, through the after-tax cost of debt in the optional WACC helper. There is no separate tax modelling of the cash flows themselves.
Currency is presentational. There is no exchange-rate handling, so a multinational must be modelled in a single currency you choose.
The forecast horizon is capped at twenty years. Explicit forecasts beyond that are false precision rather than extra rigour.
Things it will refuse to do
It will not compute a perpetuity terminal value when the terminal growth rate is greater than or equal to the discount rate, because the result would be infinite or negative. It explains the problem instead.
It will not run on zero or negative starting free cash flow, because the resulting terminal value is meaningless.
It will not produce a result from incomplete or non-numeric inputs. Errors are shown against the specific field rather than allowed to become a silent NaN, which was a real failure mode in the project this tool replaced.
It will not tell you what to do. There is no verdict, rating or signal anywhere in the interface or the exports.
Questions
Why cap the forecast at twenty years?
Because a year-by-year forecast beyond two decades is not a forecast. The cap prevents a false impression of rigour, and anything longer is better handled through the terminal value.
Will you add live financial data?
No. It would require a paid API, would send your queries to a third party, and would undermine the privacy position that the tool runs entirely in your browser.
Limitations
- No market data, live or historical. Every input is manual.
- One discount rate and one capital structure for the whole forecast period.
- No separate tax, currency or option-scheme modelling.
- Forecast horizon capped at twenty years.
- Unsuitable for loss-making companies, banks and insurers.
- No recommendations, ratings or signals of any kind.
Last reviewed 2026-09-13.