How a Thecel valuation is built

The short version

• You give Thecel a company's past financial statements and your assumptions about the future.
• Thecel projects the three statements forward and keeps them linked, then checks that the balance sheet balances.
• It estimates the cash the business should generate each year, converts that cash into today's money with a discount rate, and adds a value for the years after the forecast.
• It shows the answer two ways, with warnings and sensitivity ranges beside it, so you can see how much depends on your assumptions.

1. The three statements

A financial model has three statements. The income statement shows profit. The balance sheet shows what the company owns and owes. The cash flow statement shows where cash came from and where it went.

For the forecast years, Thecel builds the cash flow statement from the projected income statement, the projected balance sheet and the supporting schedules for debt, working capital, capital spending and depreciation, and shareholders' equity.

The ending cash from the cash flow statement is written into the cash line of the balance sheet. Cash is the line that connects the statements.

2. The balance check

A balance sheet balances when total assets equal total liabilities plus equity. Thecel checks this for every year, past and forecast.

A year counts as balanced when the two sides differ by less than 0.005 of the unit the model uses. In a model shown in millions, that is 5,000 in the currency.

Thecel will not build the Excel workbook or the presentation while any year fails the check, or while a year has only one side filled in. The server makes the same check before it builds either file.

What the check guarantees: the balance sheet adds up. It does not guarantee that the numbers or the assumptions are right. A model can balance and still describe the wrong business.

Because cash is the line that connects the statements, a mistake elsewhere in the model can be absorbed by cash while the sheet still balances. A second check exists for that reason. It compares the cash on the balance sheet with the cash flow statement, and the projected statements screen shows a red warning when they differ. That second check warns. Only the balance check blocks an export.

3. Free cash flow

The valuation is built on unlevered free cash flow: the cash the business generates for all of its investors, before any payments to lenders.

For each forecast year, Thecel takes operating profit (EBIT), subtracts the tax on it, adds back depreciation and amortization, subtracts capital spending, and adds or subtracts the change in working capital and in other operating balances such as leases.

Tax on operating profit is the tax rate times the profit in a profitable year and nothing in a loss year. If you switch on carried forward tax losses, a loss schedule decides the tax instead.

You can choose to add stock based pay back as a non cash cost.

4. The discount rate (WACC)

Cash received later is worth less than cash today, so each year's cash is discounted at a rate that reflects the risk of the business. Thecel uses the weighted average cost of capital, known as WACC.

The cost of equity is the risk free rate plus beta times the equity risk premium. The cost of debt after tax is the interest rate on debt times one minus the tax rate. WACC weighs the two by the share of equity and the share of debt in the company's funding.

Each input starts from a default that is labelled with where it came from. You can change any of them.

• Risk free rate: for a company that reports in US dollars (a United States company that states no currency is read as US dollars), the live yield on the US 10 year government bond, from Yahoo Finance. If the feed is down, older than 7 days, or outside 0.5% to 15%, the default is 4.5% and is labelled as a fallback. A saved project never changes when you open it: if a newer live rate exists, Thecel offers it and waits for your click. For other countries, the default comes from a table inside Thecel of 10 year government bond yields, as at Jan 2026. Where a country carries a material risk premium, Thecel takes that country's default spread off the yield, because the equity risk premium already prices that risk. There are two exceptions. Euro countries use the German government bond yield, and if taking the spread off would leave a rate below the country's own inflation, the yield is kept as quoted.
• Equity risk premium: the country's figure from Aswath Damodaran (NYU Stern), as at Jan 2026. If the country is not matched, the mature market figure of 4.23%.
• Beta, which measures how much the stock moves with the market: the company's own market data or the estimate on its company context page, otherwise the median beta of the comparable companies you accepted, otherwise 1, labelled as a guess.
• Tax rate: the company's own effective tax rate from its statements first, then the country's statutory rate (a table inside Thecel, as at Jan 2026), then a generic rate.
• Cost of debt: the company's own interest expense divided by its average debt first, then the company context, then 6%, labelled as a guess.
• Debt weight: your own target if you enter one, otherwise the median market debt share of the comparable companies you accepted, otherwise an industry default. Book value of equity is not used, because it says little about what the equity is worth.

5. The value after the forecast

A company is expected to keep operating after the last forecast year. Thecel adds a terminal value for that, and works it out two ways.

Perpetual growth (the Gordon method): the final year's free cash flow, grown once at the terminal growth rate, divided by the discount rate minus the growth rate. It assumes cash flow grows at that steady rate for ever.

For this method, Thecel first adjusts the final year so that depreciation equals capital spending, because a business cannot write off more or less than it invests for ever. The explicit forecast years are not changed. You can switch the adjustment off.

Exit multiple: the final year's EBITDA (profit before interest, tax, depreciation and amortization) times a multiple you choose. It is treated as a sale of the business at the end of the last forecast year.

The central estimate is the simple average of the two enterprise values. Each method is also shown on its own.

By default, each year's cash is treated as arriving at the end of the year. You can switch to the mid year convention, which treats it as arriving evenly through the year and gives a higher value. The perpetual growth value follows that timing. The exit value does not, because a sale happens on one date, the end of the last year.

6. From enterprise value to value per share

Adding up the discounted cash flows gives enterprise value, the value of the whole business. To reach the value for the owners of the shares, Thecel subtracts net debt (debt less cash), subtracts the share of the business owned by minority investors, and adds investments that are not part of operations, at book value. You can switch the investments off.

Cash that is labelled as restricted is not counted against debt.

The result is divided by the number of shares. You can use the basic share count or a diluted count that adds options and restricted stock units, using the treasury stock method.

7. Scenarios and sensitivity

Thecel offers Bull, Base and Bear cases. By default, Bull adds 2 percentage points to revenue growth each year, 1 point to operating margin, takes 0.5 point off the discount rate, adds 0.25 point to terminal growth and 1 turn to the exit multiple. Bear does the opposite by the same amounts. You can edit every figure.

Each scenario runs through the same valuation code as the main result, so a scenario's value is what the valuation screen would show with those inputs. The revenue change is applied from the first forecast year with margins held constant, so costs scale with revenue. It is a quick approximation, not a rebuilt forecast.

A tornado chart moves one assumption at a time, by a fixed amount each way, and ranks the assumptions by how much the value changes.

The sensitivity tables show enterprise value across the discount rate (one point either side, in half point steps) against terminal growth (one point either side, in half point steps) and against the exit multiple (two turns either side, in steps of one).

8. Guardrails

Guardrails are warnings the valuation raises about itself. They tell you when a number should not be quoted yet. They do not change the figures.

The valuation warns when:

• terminal growth is equal to or above the discount rate, which makes the perpetual growth formula meaningless
• a terminal value or an enterprise value is zero or negative
• the terminal value is more than 85% of the total value, so most of the answer rests on the years after the forecast
• the two methods differ by more than 30%
• the growth rate implies an exit multiple more than one and a half times away from the one you typed, or the multiple you typed implies a growth rate that is negative or above the risk free rate
• carried forward tax losses are left unused after the forecast
• the statements show items that distort the tax rate, income from affiliates that the valuation does not count, or a minority interest that looks wrong.

9. Where AI is and is not used

AI features are optional. They suggest how to classify line items and starting assumptions for the forecast. They are starting points, and you accept or change them.

The valuation arithmetic described on this page is ordinary code. No AI model takes part in it.

10. Where the data comes from, and how fresh it is

• Financial statements: from you. You type them, paste them or import them. Thecel does not fetch a company's statements for you.
• Prices and company figures for listed companies: Finnhub, or Yahoo Finance when no Finnhub key is configured. An answer is kept on the server for up to 5 minutes before it is fetched again, and the screen shows the provider and the time.
• The US 10 year yield: Yahoo Finance, kept on the server for up to 5 minutes, under the rules in section 4.
• Country equity risk premiums: Aswath Damodaran (NYU Stern), in a table inside Thecel, as at Jan 2026. This is not a live feed. It changes only when the table is updated.
• Tax rates and local government bond yields by country: a table inside Thecel, as at Jan 2026. This is not a live feed either. The company's own tax rate comes first when its statements show one.
• Credit spreads: FRED (Federal Reserve Bank of St. Louis), used only to check whether your cost of debt is plausible. They do not set any input.
• Brazil: Banco Central do Brasil publishes the Selic rate, inflation and the Focus survey, shown on the Intelligence screen. The Selic rate becomes the risk free rate only if you choose to use it.

The providers named on this page are the ones in use today, and they can change. The Terms of Service list the current providers of market data, AI features, sign in, payments and hosting.

11. What this is not

Model output, not investment advice. Not a certified appraisal.

The next three paragraphs are section 2 of the Terms of Service, word for word.

Nothing produced by the Service (a valuation, a price per share, a scenario, a sensitivity table, a slide that says “buy”, “hold”, “sell”, “proceed”, “negotiate” or “walk away”, or any recommendation) is investment advice, an offer, a solicitation, or a recommendation to enter into any transaction. Every such output is computed from assumptions you chose and is attributed to you in the exported files for that reason.

We are not a broker-dealer, investment adviser, accountant, auditor or law firm, and we are not registered with any financial regulator. You are responsible for any decision you make using the Service, and for obtaining professional advice where you need it.

AI-generated suggestions are produced by a third-party model and can be wrong, incomplete, or confidently mistaken. They are offered as starting points for your judgement and never as conclusions.