18.4 Presenting Model Outputs
Key Takeaways
- A management-ready DCF exhibit is drivers, WACC build, TV share, equity-bridge waterfall, football field, and WACC-by-g sensitivity — not a raw 200-row sheet dump.
- Alder Gordon year-end DCF: EV $2,071 million − debt $800 − preferred $50 − NCI $30 + cash $90 + investments $20 = equity $1,301 million, or $26.02 per 50.0 million diluted shares versus a $24.00 market.
- Terminal value is 76.2% of Alder's EV, a common 60–80% modeling outcome; a 50-basis-point WACC increase to 9.5% drops implied value to about $23 per share.
- Football-field bars must use the same net debt, preferred, NCI, and diluted share count; do not mix enterprise-value bars and equity-value bars on one axis.
- Integrity: every exhibit number traces to a model cell; a slide that says 12% volume growth when Apex's model says 7.6% with a $1.00 price increase fails the case.
The Case Study Wants an Exhibit, Not a Sheet Dump
CFI's final is 50 randomized multiple-choice items including Excel modeling case studies, 3 hours, passing 70%. Help Center study tips: pace typical items under 3 minutes; budget about 45 minutes per case study (60 max). A case that produces a DCF is not asking you to screenshot DCF!A1:Z200. It is asking for a management-ready exhibit: the drivers, the WACC, the value, the football field, and the sensitivity — with every number matching the model.
Presentation & Visuals is about 5% of planned exam weight. In practice the domain also grades every case: a perfect unlevered-free-cash-flow schedule with a slide that shows $28.00 when the model shows $26.02 is a presentation fail and, if a later item uses the slide figure, a valuation fail too.
What to Show from a DCF
Alder Coatings, Chapter 15, year-end Gordon case (teaching figures, not a published CFI table).
1. Key drivers — one table, one slide
| Driver | Assumption | Why it is on the exhibit |
|---|---|---|
| Revenue growth | 8% → 4% over five years | Explicit period must fade toward g |
| EBIT margin | 15.5% → 16.3% | Margin must be stable enough for TV |
| Tax rate | 25% | NOPAT = EBIT × (1 − t) |
| NWC | 12% of revenue | ΔNWC is not optional in UFCF |
| Capex vs D&A | 55 vs 52 in Year 5 | Near steady-state |
| WACC | 9.0% | Discount rate |
| Perpetual g | 2.5% | Must be < WACC and at or below long-run GDP/inflation |
| Exit multiple (cross-check) | 8.0x Year-5 EBITDA | Implied g 1.75% |
UFCF path: 102, 117, 128, 143, 154 ($ millions). Present value of explicit UFCF $492.3 million. Gordon TV at Year 5 $2,428.46 million, present value of TV $1,578.3 million. Enterprise value = $2,070.6 million, shown as $2,071 million on the exhibit.
2. WACC build — show the arithmetic
Market equity $1,200 million, market debt $800 million, V = $2,000 million. E/V = 60%, D/V = 40%. Risk-free rate 4.0%, levered beta 1.60, equity risk premium 5.0%, so cost of equity Re = 4.0 + 1.60 × 5.0 = 12.0%. Cost of debt Rd 6.0%, tax rate T 25%.
WACC = (E/V) × Re + (D/V) × Rd × (1 − T) = 0.60 × 12.0% + 0.40 × 6.0% × (1 − 0.25) = 7.20% + 1.80% = 9.00%.
Preferred of $50 million is not inside this 9% (small versus V) and is subtracted in the equity bridge. If a stem makes preferred large, add (P/V) × Rp with no tax shield. Do not hide the stack behind a single 9% typed on the slide.
3. Terminal-value share of value
TV share = 1,578.3 / 2,070.6 = 76.2%. CFI treats 60–80% as a common modeling outcome, not an official constant and not a target. On the exhibit, print 76.2% and one sentence: most of EV is terminal value, so a 50-basis-point WACC move is a large dollar move. If TV were 95%, the exhibit should flag that the explicit period is not doing work.
4. Equity-bridge waterfall
EV 2,071 − debt 800 − preferred 50 − NCI 30 + surplus cash 90 + non-core investments 20 = equity 1,301. Diluted shares 50.0 million. $26.02 per share versus market $24.00. That is the section 18.1 waterfall with a management title: Gordon year-end DCF implies $26.02 versus $24.00 market.
Check: 2,071 − 800 − 50 − 30 + 90 + 20 = 1,301. If a slide shows equity $1,351 million, someone dropped preferred. If it shows $26.20, someone used about 49.7 million shares instead of 50.0 million.
5. Football field
| Method | EV ($ m) | Equity ($ m) | Per share |
|---|---|---|---|
| DCF Gordon, year-end | 2,071 | 1,301 | $26.02 |
| DCF Gordon, mid-year | 2,162 | 1,392 | $27.84 |
| DCF 8.0x exit, year-end | 1,896 | 1,126 | $22.52 |
| Current market | — | 1,200 | $24.00 |
CFI's dashboard course formats a football field with data labels. Chapter 16's Northline field is the same object: DCF, trading comps, precedents, and current EV as a reference line, not a fourth method. Do not average the bars into a fake precision price. Do not drop a 21x outlier into the mean.
All bars on one field must be the same claimant. Alder’s table is per diluted share. Mixing enterprise value in $ millions on the same axis as $26.02 is a dual-axis cousin of section 18.1: the scales are not comparable. Convert every method through the same debt, preferred, NCI, cash, investments, and 50.0 million shares before you plot.
Sensitivity Table
A two-way data table (Chapter 13) on WACC × g, output value per share (or EV), belongs next to the football field. Teaching grid at g = 2.5%, fully re-discounting explicit UFCF and Gordon TV (not holding explicit PV constant):
| WACC | Implied value per share | Versus $24.00 market |
|---|---|---|
| 8.5% | ~$29.58 | Above; cheaper capital lifts TV hard |
| 9.0% (base) | $26.02 | Exhibit headline |
| 9.5% | ~$22.96 | Now below the market |
A 50-basis-point WACC increase drops about $3 per share because TV is 76% of EV. That sentence is why the table exists. Holding the $492.3 million explicit PV fixed when WACC changes is an approximation trap — the discount factors on 102, 117, 128, 143, and 154 change too.
At base WACC 9.0%, g also moves TV. g = 2.0% cuts Gordon TV_5 from $2,428 million toward $2,244 million. g = 3.0% lifts it toward $2,644 million. Print two or three cells you actually calculated. Do not screenshot a blank data-table template. Do not set g = 9% when WACC is 9%; the Gordon denominator is zero.
Management-Ready Versus Raw Dump
| Raw sheet dump | Management exhibit |
|---|---|
| 200 rows of UFCF plumbing | 8-row driver table |
| Blue-font on every input | WACC stack in four lines |
| Circular-interest iteration flags | TV share and the 60–80% diagnostic |
| Hidden columns, #REF! | Football field with four bars |
| Print area = entire workbook | One dashboard plus 6–8 slides |
| Chart junk, 3-D, unmarked dual axis | Direct labels, $ millions, year labels |
The case is closer to CFI Dashboard 2 plus a six-slide distributed pitchbook than to File → Print. Budget the 45 minutes so that the last ten minutes are exhibit hygiene, not extra decimal places on Year 3 ΔNWC.
Integrity: The Slide Must Match the Model
This is the Presentation domain's mechanic (Professional Ethics is Chapter 19; the arithmetic lives here):
- Traceable: every exhibit number has a cell. $26.02 = 1,301 / 50.
- Same vintage: if you change volume to 2,200,000, the dashboard and the slides refresh. No paste-as-values without a timestamped freeze process (section 18.2).
- Same unit and share count on every page.
- No silent switches of mid-year versus year-end. If the model is year-end $26.02, the title must not say mid-year $27.84.
- No AI or copy-paste drift. Revenue grew 12% on volume is a lie if Apex grew 7.6% with a price increase.
- Football-field bars use the same net-debt, preferred, NCI, and diluted-share convention as the DCF bridge.
Alder check you can recite in a case: 2,071 − 800 − 50 − 30 + 90 + 20 = 1,301. Dropping preferred and NCI overstates equity by $80 million and the price by $1.60 per share. Mixing EV $2,071 million as if it were a per-share number is a different fail: 2,071 / 50 = $41.42, which skips the entire bridge.
Exam traps for section 18.4
- Submitting the raw DCF sheet as the answer exhibit.
- A football field with one bar (only the DCF you like).
- Omitting TV share, then being surprised that 50 bp of WACC moves about $3 per share.
- Dual-axis of EV and WACC, or EV bars mixed with per-share bars.
- A pie of sources of value with 12 slices.
- Title Valuation instead of Gordon year-end DCF implies $26.02 versus $24.00 market.
- An elective LBO debt waterfall on a going-concern core case.
- Rounding $26.02 to $26 on one slide and $26.02 on the next without a note.
The exhibit you can defend is the one a CFO can read in three minutes: drivers, 9.0% WACC, 76.2% TV, $26.02, a field that includes $22.52 and $27.84, and a sensitivity that shows why WACC is not a rounding issue. If those figures do not match the model, start over on the exhibit — not on a new DCF.
Alder Gordon year-end DCF prints EV of $2,071 million. After debt $800, preferred $50, NCI $30, plus cash $90 and investments $20, using 50.0 million diluted shares, the exhibit per-share figure is:
Why does a 50-basis-point WACC increase belong on Alder's management exhibit?
On an FMVA Excel case study, a management-ready presentation of DCF and comps output is: