Terminal Value
The estimated value of all a company's cash flows beyond the explicit forecast period, in one figure.
What it is
Terminal value captures the worth of a business after the detailed forecast years end, since a company is assumed to keep operating indefinitely. It is added to the discounted forecast cash flows to complete a DCF. In many models it makes up the majority of the total estimated value.
Why it matters
Because terminal value often dominates a DCF, the assumptions behind it deserve the most scrutiny. A perpetual growth rate that is even slightly too high can inflate the valuation dramatically, which is a common way DCF models overstate intrinsic value.
How it's calculated
Two common methods: the perpetuity-growth method grows the final forecast year's cash flow at a modest constant rate forever and discounts it; the exit-multiple method applies a valuation multiple (such as EV/EBITDA) to the final forecast year. Both produce a value as of the last forecast year, which must then be discounted back to today.
How Quintarthai uses it
Historical free cash flow and margins that anchor a sensible terminal growth assumption are available on each company's Financials and Ratios tabs.