OpCo: free cash flow to firm
A free cash flow to firm valuation following Damodaran's published method, with reinvestment driven by growth and return on capital.
Every number below is checked against an independent reference implementation on every commit — period by period, and on each metric, inside a declared tolerance. See benchmark methodology.
The case
A cross-industry operating company valued on free cash flow to the firm: revenue growing off a declining growth path, operating margins, cash taxes, capital expenditure and working capital, discounted to an enterprise value.
The rate declines year on year, so revenue is a running product of ten different growth rates rather than one rate compounded. The cost of capital converges the same way, and the run discounts each year at that year's rate.
The reference
A widely used academic valuation spreadsheet, published free by its author with an explicit grant to download and modify. It publishes the full ten-year build-up and the resulting value.
Redistributable, and the workbook is committed under reference/ so a reader
can mark every figure against the original.
What it exercises
| Pack | opco |
| Contract types | opco.revenue_line, opco.opex_line, opco.reinvestment, opco.cash_taxes |
| Declared | three curves, one of them the cost of capital the run discounts along |
| Language features | pack contracts driven by curves; declared state inside the pack's growth rules |
| Conventions | a declining growth path, margin-driven operating expense, cash taxes, reinvestment funding next year's growth, a cost of capital that converges over the forecast |
The reference publishes the drivers rather than only the results, which is what a pack rule consumes, so the pack's lowering is checked and not only the engine's arithmetic.
The result
All ten years reproduce exactly, reinvestment included, and the present value of the ten years of free cash flow along the converging cost of capital is the workbook's own figure.
Revenue is carried as declared state because the growth rate moves:
pow(1 + g, t) applies one year's rate as though it had held from the start,
which is exact only while the rate is constant. Reinvestment is derived from
revenue and the following year's growth, which the model reads a year ahead.
The delta
None.
Run configuration
{"deterministic":{"annual_discount_curve":"cost_of_capital"}}Verified results
Checked period by period: 4 series across 10 periods — 40 values in all, each within ±0.001 of the reference.
opco.revenue.recurring.coreopco.opex.recurring.operatingopco.taxes.cash.federalopco.capex.reinvestment.growth
Summary metrics for the base run:
| Metric | Value | Tolerance |
|---|---|---|
model.npv | 16,394.54 | ±0.001 |